7 Tips to Improve your Credit
Report
As the spring home buying season gathers momentum, you'll want
to make sure you're ahead of your competition. The competition is
other Buyers who want the same home you do. Anything you can do
to give yourself an edge is a worthwhile effort, and making sure
your credit is up to par is a great first step. Here are some ways
to make sure your credit history doesn't prevent you from getting
a mortgage for the home of your dreams.
Tip 1: Close charge accounts or lines of credit you don't use.
Unused accounts or lines of credit are red flags of possible future
spending. If you don't need the accounts, get rid of them. The AVAILABILITY
of credit is something that can pull your credit score down. Getting
rid of accounts will push your credit score upward.
Tip 2: Don't close your unused accounts all at once! If
you do, lenders may think you are in financial trouble. Close no
more than 3 at one time. Wait about a month, then close another
3 (if you have that many). Continue this pattern until all the accounts
you want closed are done.
Tip 3: Don't max out your credit lines. In fact, try not
to use more than 60% to 75% of your total credit capacity on EACH
of your cards. If you have a MasterCard with a maximum credit line
of $10,000 and a balance of $9,000 on it, you would be better served
to move $3000 of it to another account. This way you'll only be
at 60% of your available credit line on this account. This strategy
will move your score upward.
[Note: Move your balances back to the lower-rate cards AFTER you
have your mortgage!]
Tip 4: Frequent credit inquiries lower your credit score.
As a general rule, you shouldn't apply for credit to more than four
or five places in a six-month period. This will minimize the effect
of inquiries. Be mindful NOT to give your social security number
to anyone who might pull your credit report.
Tip 5: Pay all your bills on time. Often easier said than
done. You can automate your payments through your bank or any reputable
on-line service. This way you won't forget to make payments. Just
make sure you have enough funds in your account(s) to cover these
automatic withdrawals.
Tip 6: If you're late with a payment, ask the creditor to waive
the late fee. This way, it won't show up on your credit report.
I have experienced this personally. It works as long as you don't
repeat this behavior. Most creditors are understanding, and the
person you speak with will usually have the authority to accommodate
you.
Tip 7: Check your credit report. Very often, these reports
contain errors. Check your credit report at least once a year, and
DEFINITELY do it a few months before applying for a mortgage loan.
That way, you have time to correct erroneous entries or improve
your credit record before you apply for the loan. You can order
a copy of your credit report from any of the three major credit
bureaus:
Equifax, (800) 685-1111, www.equifax.com
Experian, (888) 397-3742, www.experian.com
TransUnion, (800) 888-4213, www.transunion.com
Credit improvement is a major part of your ability to qualify for
any mortgage financing. From this starting place, your mortgage
professional can help you determine the program that is most suited
to your particular situation and help you fully explore your options.
Armed with this knowledge, you'll be in prime position to shop confidently
for your new home.
Mark Atkinson is a Mortgage Professional with A&M Mortgage
Solutions, a resource for those buying, selling or refinancing real
estate. He can be reached by phone at (860) 350-8400. E-mail at
Info@AM-Consult.com.
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