How to Maintain Your Credit Rating During Tough Times.

by Wade Barnes 18. December 2008

Good Credit vs. Bad Credit

Credit ratings are complied by the three credit bureaus, Equifax, TransUnion, and Experian. They all have slightly different methods and they are ever evolving but basically, credit scores are a compilation of the following:

Payment History
Outstanding Debt
Length of Time on Established Accounts
Number of Inquiries
Types of Credit

The list is in order of most important to least important with regards of impact on your credit rating. It is important to remember to always pay your bills on time. If you are unable to make a payment, talk to your lender. Most lenders will work with customers who need help.
Be sure not to max out credit cards and other credit lines. As outstanding balances reach credit limits, this has a negative impact on your credit rating. Be sure to keep old accounts open, this helps establish a positive history. Keep the number of inquires to a minimum and diversify your borrowing methods (don't have all credit card debt).

Although times may be tough, the most important factor is to make payments. If you struggle making payments talk to your lender. I can't emphasize that enough.

If you are working to rebuild your credit, remember the factors that impact your rating. Every little bit will help get you back on the road to an improved credit rating.

A great step in evaluating your position is to get a free copy of your credit report. Although the credit bureaus charge for your credit score, each bureau is obligated to provide you with one free copy of your report every year. You can obtain your free copy by visiting www.annualcreditreport.com.

Feel free to be in touch with comments, suggestions, or questions.

Wade Barnes wbarnes@1stmarinerbank.com

National Foundation for Teaching Entrepreneurship (NFTE)

by Wade Barnes 4. November 2008

About 2 years ago I became involved with the National Foundation for Teaching Entrepreneurship (NFTE) www.nfte.com. Here, at 1st Mariner Bank, we constantly strive to serve our communities. As the entrepreneurial spirit is alive here at 1st Mariner and I couldn't think of a better way to stay involved with the community than to become involved with such a meaningful program.

The basis of NFTE is curriculum taught within the school system that supplements the basic math and finance courses. The program allows the students to apply the principles learned by creating a business from concept to practice.

I had the great honor to work with a number of students at Patterson High School. They all had great ideas and worked hard to implement their plans. Two students took their plans to the next level, Jamal and William. Jamal and William created a business they named J&W Sensations. J&W Sensations creates and sells all natural lotions in a variety of scents. Not only are their lotions wonderful but they also proved themselves as businessmen too.

Jamal and William won their in-school business competition and as a result were asked to compete in the citywide competition. They competed and won. As a result of this tremendous victory, they were asked to compete in New York City at the national competition. Although Jamal and William didn't win the national competition, they did a wonderful job representing themselves, Patterson High School and NFTE.

Kevin and I had the honor to work with J&W Sensations and I know I speak for both of us as we congratulate these talented young men. J&W will be at various selling events throughout the year including an upcoming event in the 1st Mariner Bank Tower in December, be sure to check them out. For more information, please contact me at wbarnes@1stmarinerbank.com.

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Frozen HELOC?

by Wade Barnes 22. August 2008

Given the current declining trend in the housing market, some lenders have chosen to not only exit the Home Equity Line of Credit (HELOC) business but also to freeze their existing customers' lines. What does this mean for me?

If you have a HELOC with a lender who has decided to freeze their current lines, some impacts are rather blatant while others may not be so obvious. The obvious part is once your line is frozen, you are unable to make further advances. This could place you in a huge bind if in fact you had plans to use your HELOC for future home projects, a wedding, school expenses, vacation, or the like.

What's not so obvious? Well behind the scenes, when a lender decides to freeze or close your HELOC one of two things can happen. First, if you have no outstanding balance, the creditor will likely report to the credit bureaus (Equifax, Experian, and TransUnion) that the loan was closed by the credit grantor. Although this was closed due to no adverse action on your behalf, this is not a desirable notation on your credit report. If you have an outstanding balance, the creditor will likely reduce your credit limit to match your outstanding balance, which looks as if you have maxed out your credit line. Having a maxed out credit limit is also undesirable.

Having accounts that were closed by the credit grantor as well as having credit limits that are maxed out both impact your credit score. So, not only are you unable to use your credit line for future uses, your credit is also being tarnished by the lender's decision to exit the market.

What's next? Well, you have options. Not all lenders are exiting the market; in fact many lenders are still actively seeking this business. It would be wise to find a lender who is interested in your business. Refinancing your credit line will allow you to not only have the line of credit for future purposes but will also lessen the negative impacts of your lender's decision.

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