Thursday, August 1, 2013

Are You Alive? Yet Another Reason to Check Credit Annually

In every class I teach, I am always telling people about the importance of checking their credit every year. Recently I had a mortgage client who had never checked his credit, but was confident everything was in good shape because he didn't ever really need credit so he had no debts. I pulled the credit, he was correct about no debts, but he was being reported as deceased. Yes, deceased, no credit score, no credit history, which if you are deceased you really don't need anyway, but this is a problem when you are alive and well.
He was surprised to find out about this, and has gone to work to rectify it with the three credit bureaus.  The problem is why he needs (or wants) credit now, he wants to buy a house. Can he buy a house right now? Not at this point, not until his credit report is corrected, and then we will have to see about establishing credit.
This is yet another example of why we as consumers need to check our credit with some frequency, a minimum of once a year. Credit is an ongoing thing, and when you need it you want to make sure it is there. Opportunity and survival, the two reasons we need credit, and the best time to by batteries is before the hurricane hits, the best time work on credit is when you don't need. As the saying goes, banks are always willing to lend you money when you don't need it, but unwilling when you really need it. Preparation prevents this problem, get your umbrella on a sunny day, don't wait for it to rain.
Imagine waking up one day and deciding to run a marathon. I don't mean waking up and deciding to train for a marathon, I mean waking up, going to a race, signing up and running in a marathon with no training or preparation. How is that going to go? Badly, because in all likelihood you wouldn't even be able to sign up for a marathon the day of the race, at least not a popular race, let alone go out untrained and complete the running course. Sounds ridiculous doesn't it? Yet every week I talk to someone who is doing the same thing, it just isn't running a marathon, it is buying a house, which is kind of like a marathon, there is preparation, and addressing credit now is the first step in that training process.

Patrick Ritchie
Mortgage Finance Instructor
Ritchie School of Real Estate Finance
480-203-4641 Cell

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