2/15/2013 3:45 PM ET|
5 fast fixes for your credit score
If you're looking for a quick bump higher, these strategies may be useful in nudging that all-important number higher.
Mortgage borrowers today understand the need for a high credit score. You won't have access to the best mortgage rates unless your credit score is 740 or higher.
If you're in the market for home loan and simply need to give your score a little boost before submitting your application, experts say there are several things mortgage borrowers can do to push their scores up.
Here are five methods to raise your credit score quickly:
No. 1: Pay down credit card balances
"People with the highest FICO scores carry balances on their credit cards that are less than 20% of their total available credit," says Anthony A. Sprauve, the director of public relations for MyFICO.com in San Francisco. "Your balances account for 30% of your credit score."
While is it impossible to say exactly how much any one action will improve your score, Rich Arzaga, the founder and CEO of Cornerstone Wealth Management in San Ramon, Calif., says, "Paying down debt is an easier and faster way to improve your score than fighting derogatory credit history, and it's more in your control."
Michael McNamara, regional vice president of United One Resources in Wilkes-Barre, Pa., which provides rapid rescoring services for lenders, says you should pay down your debt to less than 30% of your credit limit. Transferring a balance from one credit card to another is not likely to improve your score much because total utilization of credit is more important than each individual debt, he says.
No. 2: Fix credit report errors
McNamara says that while every individual is different, he has seen credit scores rise by as much as 100 points after a credit report error has been removed.
"For example, a common item is a medical collection that you don't know about because you thought the insurance company had taken care of the bill," says McNamara. "Sometimes you can have it removed if you can prove it's invalid, and sometimes it can help to pay it and then have it removed."
No. 3: Eliminate disputed accounts
Kevin Quaid, branch manager with FitzGerald Financial Group, a division of Monarch Bank in Alexandria, Va., says disputed items on your credit report should be removed, particularly if you are applying for a conventional loan guaranteed by Fannie Mae or Freddie Mac.
"Fannie Mae says disputed items have to be removed, so the borrower must send a letter to the creditor and the credit bureau that says they are no longer disputing the item," says Quaid. "Freddie Mac puts less weight on this as long as you don't have any late payments."
Disputed accounts appear as a derogatory item to Fannie Mae and Freddie Mac, said Gail Kullman, a senior loan officer with PrimeLending in Alexandria, Va., in an email. She recommends contacting the creditor directly and asking to have it resolved and removed immediately from your credit report.
No. 4: Use an old credit card or apply for a new one
While you may assume your credit score is high because you don't use credit cards, your score will actually improve if you can prove you use credit wisely. Unused old accounts won't have a positive impact on your score unless you use them occasionally.
"If you have four or five accounts with no activity and then use one and pay off the balance immediately, your score will go up," says McNamara.
McNamara says that while most people should not apply for additional credit when applying for a mortgage, sometimes a customer who lacks a recent credit history can improve his or her score by being approved for a new credit card and then using it once.
No. 5: Don't close any accounts
Arzaga says opening new, unnecessary credit cards and closing unused credit card accounts are equally likely to negatively impact your score.
"Closing accounts is not advised, as it looks better to have more credit extended to you than what you are using," said Kullman in an email.
Consumers can use these strategies to improve their credit scores in a short time.
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#1. Use common sense, basic math, be disciplined and think for yourself.
#2. If you don't have the "cash" to buy it now--how will you have the funds to "pay for it" later on?
So, THINK< THINK< THINK before you use credit! --- it can come back to bite you!
#3. Listen to "been there, done that" people, like Dave Ramsey, Neal Cavuto and others whose
financial expertise can help you along the right path.
#4. DO NOT follow the example of our Federal Governement, who spends without thought of
cost controls or a planned budget. Our personal funds and hope of a better future are
being undermined and certainly diminished by such actions. SHAME ON THEM!
1st rule : Get a Job, and Keep it.
2nd rule: pay yourself first with every paycheck. Place about 10$ into a savings account. You won't miss any of that money.
3rd rule: Don't be afraid to talk to a financial planner. Learn about stocks, IRA's...etc. Anyone that says anything negative about stocks, is because they don't know about them. Choose stocks with high paying dividends.
4th rule: 1 to 3 credit cards is ok, but force yourself to pay those off within 6 months. If you can't afford it, don't buy it...
There are a few more, you are free to choose yourself. I hesitated and waited till I was 40 to do all this....now I am way ahead of my peers. You can do it too.
It's funny how the experts can't tell you how the credit gauging system works. Monkeys picking stocks as good or better than any Ivy league broker. I should'nt put monkeys in with such... I'm just disgusted with all the banking industry most should have their butt thrown in jail.
Your article on “5 fast fixes for your credit score" is misleading readers with the following false information; “You won't have access to the best mortgage rates unless your credit score is 740 or higher". THIS IS TOTALLY untrue and as a Senior Mortgage Banker since 1996 in the Washington DC area I can speak on this issue in depth. FHA minimum credit score requirement 640 / Fannie & Freddie minimum credit score requirement 620. Laws will not allow a Bank or Mortgage company to "Red Line" against a potential Home buyers credit score. Everyone has access to the same Interest Rate, however higher credit scores will allow a lower cost (Yield Spread) if the Home buyer decides to buy the rate below par. Example: 640 credit score buyer par rate 3.5% 30 Year Fix Rate WILL BE THE SAME as a buyer with 740 credit score, however the higher score will allow a greater Yield Spread Rebate. If both buyers decide a Buy Down option (Buying the rate below par) the cost could be a .25% to .50% higher for the buyer with a Lower Score. Bottom line, as long as a buyers credit score meets FHA, Fannie & Freddie guidelines everyone is ENTITLED TO THE SAME RATES.
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