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By Daniel Fisher | Broker in Charlotte, NC

Ten tips for repairing your credit history, raising score

What should you do if you have bad credit? Here are 10 tips that are designed to improve your credit history and raise your credit score: 

1.  Pull a copy of your credit history from www.AnnualCreditReport.com

AnnualCreditReport.com is sponsored by the three credit reporting bureaus, Equifax, Experian and TransUnion and is the ONLY place you can go to get a truly free copy of your credit history.  Each credit-reporting bureau is required to give you one copy once a year.

2. While you're there, buy a copy of your credit score from Equifax.com.

Fair Isaac Corp.  created the concept of a credit score, which most people know as their FICO or Beacon score.  If all you need is your score, your mortgage lender can do a soft check that does not show up on your report.  If you buy your credit score from Equifax, you will get a snapshot of what your credit information means to your creditors.  The FICO score runs from 350 to 850  The higher the number, the better.  Your target should be to have a credit score of at least 720.

3. Check your credit history thoroughly.

You're looking for errors, misinformation and negative information that might count against you.  File a dispute with the three credit reporting bureaus if you spot any errors or a charge against you that you do not recognize. Most credit reports have some serious error in them, so fixing these will boost your score.

4  Understand what kind of debt you're facing.

Make a list of everything you owe, the interest rate each debt carries, and the minimum payment due each month. Then, establish priorities for your debt: mortgage, real estate taxes, credit cards and medical bills, which should be paid in that order.

5. Negotiate with your creditors for a lower interest rate.

A lower interest rate results in your paying off more of your balance every month.  If you have a good credit score (over 720 in this market), you should be able to find other credit cards featuring zero percent to 5 percent in interest for the first year, or for the life of a balance transfer. (www.CardRatings.com and www.CardTrak.com allow you to compare credit card offers.) Just be sure you read the fine print: some credit cards have big penalties if you do not charge a purchase every month.

6.  Pay down the debt with the highest interest first.

Pay your mortgage and home-equity loan and lines of credit in full each month.  Then, throw any spare cash at the debt that carries the highest interest rate first.

7.  Pay everything on time, even if you can only make the minimum payment.

Paying your bills on time each month is the most important thing you can do to protect your credit history and credit score.  Even one late payment can seriously damage your credit history and credit score, and it can take a year's worth of on-time payments to start to heal your credit history and raise your credit score.  Lenders believe that there is a higher risk that they will not be repaid if you don't pay your existing bills on time.

8.  Don't charge more than 25 percent of your maximum available credit limit.

If you carry a credit card balance that is a higher percentage of your available credit limit, your credit score will go down. Why? Because creditors' research has shown that people who charge the maximum on your credit cards, can't properly manage their credit.  You're better off spreading out your debt between three or four different cards than having it all piled on one card.

9. Don't open and close a lot of accounts.

The bottom line is that credit scores tell current and future creditors how likely it is that you won't pay back your debts.  Every time you apply for a new credit card, that creditor pulls a copy of your credit history from the credit reporting bureaus.  That "inquiry" gets reported on your credit history. EXCEPTION: it is fine to open a few $200 or $300 secured credit cards, charge $20+ a month and paying it off or leaving a small <$10 balance every month.

10.  Don't share credit (except with a spouse).

It's easy to tell someone that you'll co-sign a credit card, student loan or a mortgage loan application, especially if it's someone you've known for a long time.  Once you're a co-signer for a loan, you're legally obligated to make those payments -- whether or not you can afford them.  So think carefully before you agree to co-sign a loan, and nip the problem of bad credit before it begins.


Our personal service includes fitting financing to each buyer's needs. We can direct our clients to variety of lenders, including jumbo loans, loans that allow you to lock in a rate and shop, and loans that offer income protection in case your employment situation changes after you purchase.  We also know of a variety of specialty financing programs in the NC/SC Greater Charlotte area offering options for low down payment loans, 100% financing and closing cost assistance. For some income and credit qualified households, there are also loans for buyers with no credit, low credit and middle credit scores down to 600 FICO.

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Daniel Fisher
Fisher Herman Realty
Licensed NC & SC

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