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  • Writer's pictureNicholas Swinehart

Credit Building Tip

Updated: Sep 6, 2022

So I had a conversation the other day with a local lender. I mean, these happen quite often. Except this conversation was a complete shock to me.

One thing that carries me through life is my knowledge. My intellect is what I have to bring to the table each deal I'm a part of for each client. I problem solve, I think creatively, I get answers. So every time I learn something new, it immediately gets added to my toolbox.

At breakfast with this lender and a few other realtors, we were on the topic of what's happened with our most recent clients. Well another realtor shared that her clients credit score dropped below the minimum for a loan. How did this happen? Well they paid off their car ($47,000 remaining). Credit builds on having credit payment history, multiple active accounts, and credit usage (think how much is loaned out versus total amount you can loan). With paying off their car, it closed their longest standing account and with that, they lost all that history. Their score dropped 150 points.

How do you combat that? Well a simple answer is to not pay it off entirely. Sometimes it's nice to do that though. It feels great to get out of that debt, but the system punishes us so much for it. Except, there's another answer.

When buying a home, your debt-to-income ratio is very important. That's the ratio (percent) of payments towards loans or credit cards versus how much you earn each month. 50% is usually the cut off. It depends on the loan, program, and lender.

So our lender, in the most nonchalant way, shared that if they would have paid off the car up to the last 10 remaining payments, it would not be counted against their debt-to-income ratio. So you get to keep your account, payment history, and credit score while not being affected negatively by the debt.


Seriously people, this stuff is vital. Education is important. That's what I am here for. Use a realtor who is educated. Also check out my partnered business for any of your business needs, specifically marketing, at

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