Emergency credit situations and survival

Dear Friends

I’ve decided to start blogging due to all the emergency credit phone calls I have been receiving. First don’t panic, remember it’s only credit. It’s not your health or your job, it’s just a database somewhere keeping track of your payment history.

My name is Ann, I’ve been a financial director for 15 years. I have probably interviewed and analyzed 10,000 people and their credit bureaus. I realized the need for this blog because so many people don’t understand their own credit or the ramifications of late or “charged off” credit.

First - let’s start with the basics. Your credit history is a data record of your credit payments-credit cards, auto loans, home loans, student loans, furniture loans etc… These are called applied credit. Applied credit means you signed an agreement to pay the loan back with a monthly payment - you signed a contract. There are two types, revolving and installment credit. Revolving are credit card. The monthly note can change when the balance on the card changes. Installment loans are homes and cars mostly. Installment loans have a fixed pay period and the payment is always the same, except adjustable rate mortgages or ARM’s. Those are different, but they are still called installment credit.

Installment credit is more important for your credit bureau than revolving credit, mostly due to the amount of the loan. Homes and cars are large loans. When analyzing credit, underwriters look for paid installment loans before they look at revolving credit.  In the old days of credit analysis, paid installment credit was a reflection of the customer being more credit mature.

This may help you analyze your own credit and your current situation. Many people I know are at the point where they can’t pay all their bills. So remember INSTALLMENT credit effects you history the most. Installment credit is usually your most important loan for survival; your home and your car. If you are in a emergency credit situation, remember survival is key, first pay the things you can not survive without.

It’s getting ugly out there. You are not alone, so don’t be intimidated or embarrassed. IT’S ONLY CREDIT.

Tomorrow I’ll blog about student loans.