Common Credit Score Myths

Written by Gary Gresham

A lot of credit score myths about fico score ratings get spread around and some of them are just outdated information. Sometimes even lenders can give yourepparttar wrong advice and it can get confusing. Butrepparttar 148679 bottom line is bad information can cost you money no matter who you get it from.

Fico score ratings are used for most mortgage lending, which means, you need to know what will hurt or help your credit score points. To make it clear, here are some ofrepparttar 148680 most common credit score myths.

* Checking your credit report will hurt your credit score

Checking your own credit report and credit score counts as a soft inquiry and does not go against your score. However, if anyone else like a lender or credit card company is checking your credit report, this is considered a hard inquiry and will generally knock off about 5 credit score points.

The credit score rating system treats multiple inquiries in a 14-day period as just one inquiry. The system ignores all inquiries made within 30 days prior torepparttar 148681 dayrepparttar 148682 credit score is computed. So if you want to minimizerepparttar 148683 damage from credit inquiries, shop for a loan in that short period of time.

* Closing old accounts will improve your credit report score

Sometimes even lenders will tell you to close your old and inactive accounts as a way for improving your credit report score. In most cases, closing old accounts will actually haverepparttar 148684 opposite effect withrepparttar 148685 current credit score rating system.

Canceling old credit accounts can actually lower your credit score because it makes your credit history appear shorter. If you want to reduce your levels of available credit, it's better to reduce or close new accounts instead. Applying for new credit is more likely to lower your score.

* You need to check more than just FICO score rating

If you ever hear this from anyone, consider it a red flag. All ofrepparttar 148686 three major credit reporting bureaus offer FICO credit score ratings usingrepparttar 148687 formula developed by Fair, Isaac. Even though each one givesrepparttar 148688 scores a different name you only need a fico score rating fromrepparttar 148689 three major credit reporting bureaus.

Why Are Mortgage Notes Discounted Anyway?

Written by Frederick B Webb Jr.

When real estate note brokers purchase partially paid notes, they payrepparttar note holder a discounted price after factoring inrepparttar 148619 time value of money,repparttar 148620 payer history, and property condition.

If  there is still a significant period of time left forrepparttar 148621 payer to make payments,repparttar 148622 future payments are not worthrepparttar 148623 same amount in current dollars.

Calculations are made to equate allrepparttar 148624 payments into current value, which is howrepparttar 148625 discount is determined.

After purchasing notes at a discounted price, note brokers try to restructurerepparttar 148626 loan and increase its value.

Increasingrepparttar 148627 value ofrepparttar 148628 loan requiresrepparttar 148629 payer to refinance or increase payments, which requires a new contract.

Factoringrepparttar 148630 same concept of time value of money, we can understand how increasing payments now creates more value. The note can then be sold for a higher price.

Discounts must be taken fromrepparttar 148631 loan amount due to inflation andrepparttar 148632 time value of money.

There may still be years left onrepparttar 148633 loan repayment, butrepparttar 148634 payments far inrepparttar 148635 future are not worthrepparttar 148636 same amount in dollars today.

Calculations are made using special formulas to equaterepparttar 148637 future payment amounts into today's prices, making today's price discounted significantly.

Onrepparttar 148638 other side ofrepparttar 148639 coin, notes that are well seasoned can fetch near remaining balance face value.

***Additional Major Reason Notes Are Discounted***

Although I am a broker myself, I put this site here because I want to bring you a clear understanding (from an insider's perspective) ofrepparttar 148640 nuts and bolts mechanics of howrepparttar 148641 secondary market mortgage note industry works.

A major reason many people are turned off from selling their real estate notes is because ofrepparttar 148642 discount factor......

but what you probably don't understand is that when you use a broker, like myself or any other broker anywhere, you pay additional fees that further drive downrepparttar 148643 amount of money you walk away fromrepparttar 148644 table with.

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