Credit Score in Seattle>Question Details

John Novak, Real Estate Pro in 89011

How can I improve my credit score?

Asked by John Novak, 89011 Sun May 20, 2007

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Hi John : The answer to HOW one might improve their credit score can easily researched by surfing the Internet (Google search on FICO). For starters, FICO stands for Fair Issac Corporation, the firm that developed the formula or algorithm to measure credit risk (yours and mine), the accepted standard in banking today. When people don’t pay their bills on time (or not at all), their account status is reported to 1 of 3 credit bureaus, a source to tap when a person applies for credit like a home mortgage. The articles on these 2 respected websites will give you the answers to the question you posed.

Fair Issac: http://tinyurl.com/5bbznk
Bankrate.com: http://tinyurl.com/6nrst7

Now having said this, it is very important for you to understand that you should complete this process under the direction of a lender –in advance. Here are 3 pathways you could take.

1. Realtor Referral: Many Realtors have selected their own LENDERS to work with and may have a relationship that has existed for years. If you’re Realtor has a long track record with a mortgage agent and conveys confidence and trust in them, that may be a great choice for you. This is the way I work. Since it is against both state and federal laws for either the banker or real estate agent to be paid for a referral, here is no fee paid for the business. Naturally, you should MEET (my bias) with the lender eye ball to eye ball to be sure you feel that you can work them. Be sure you bond. And you certainly want to assure yourself that their RATES are industry competitive. Outside of a credit report charge, there should not be any lender closing costs. Now there will be a fee for their service (commonly 1% of the mortgage amount when the loan closes) and that payment is split by formula between the mortgage agent and the lender. The Mortgage agent has to be paid so he can feed his family and the lender must cover overhead.

2. Lender Direct: the other choice is for you to find the lender on your own and follow the above process. I can NOT emphasize enough the importance getting someone to represent your interests that is seasoned and has some expertise. The Seattle Mortgage agent did a good job of addressing the mechanics of this process as well.

3. Procrastination: Yes, there is a 3rd alternative. Avoid it like the plaque. This is where we introduce the “early bird gets the worm” principle. Some people are absolutely convinced that whoever they know will get them a great deal because CREDIT is just NOT a problem. And if that is true, getting pre-approved NOW would “set your mind at ease” (and also that of your Realtor -- who may have been driving you around showing homes you cannot (or should not) afford).

It is important to note that BEING READY to buy a home could be crucial. Say you’re going to the lender on Monday (instead of 3 months ago and 40 houses later). Suddenly, you find that perfect home on Saturday morning. You want to make an offer (no pre-approval letter -- nuts). But we make the offer Saturday Evening and we explain that we will have the pre-approval letter on Monday. Sunday morning we are informed that another offer came in on the home. At 9 PM we are told they accepted that offer. Many times the terms of both offers are the SAME. But you have no pre-approval letter (the other party did). Bingo. Lesson time. The seller picked the strongest offer. I have been involved in several multiple offer situations where my clients offer was better (say by $ 4000), but the seller took the lesser offer with the pre-approval letter. Why? Sometimes, later on, we agents just never see those promised pre-approval offers. You do not have a strong offer without what is required to back it up. Would you sell your $500,000 home to someone who can’t substantiate their financial position? The phrase in the Jerry McGuire movie I believe was "show me the money."
2 votes Thank Flag Link Sun May 25, 2008
It is a great idea to go to a mortgage consultant that can help you analyze your credit and then help you plan a strategy to improve your credit over the next few months to a year. However, if you need some credit tips right here right now, here are some suggestions:

1) Pay down revolving credit (credit cards) down to 30% or below
2) Keep making on-time payments, if you've missed one or two, start making prompt payments and stick to them.
3) Keep credit cards open longer. Don't close an account and open another one, the length of your account will affect your credit--the shorter the worse it affects your credit.
4) Keep inquiries down to a minimum
5) Identify any and all mistakes on your report and start fixing them
6) If you a co-signer on an account with a high credit balance, get your name removed

There are many other short-term and long-term methods of improving your credit but I hope that this is enough to help you start on the right path!
Web Reference: http://www.simpluxe.com
2 votes Thank Flag Link Thu Aug 2, 2007
There are a number of things you can do. The biggest one is to make sure bills are paid on time. For more ideas, check out the article below.
2 votes Thank Flag Link Sun May 20, 2007
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
Contact
GetPrequalified.com also has great resources for this.
Web Reference: http://GetPrequalified.com
1 vote Thank Flag Link Sun May 25, 2008
Don't subscribe to multiple credit cards with high credit.
1 vote Thank Flag Link Mon May 21, 2007
John,

Great Question! I am answering this with the assumption that you have seen your credit. Here is where I would start...

Dispute Errors. If you find something that doesn't make sense or is wrong, contact the agency reporting it to dispute it (i.e. Equifax / Experian / Transunion).

Pay Down Revolving Lines to 30%. What this means is that if you have a credit line of 1000 the best balance to have on that credit line is 300. Credit Cards, Store Cards, and Credit Lines are the ones that will affect you here. Take your Limit and multiply by .30 and that is the balance that you want to have on that particular item.

Make sure your credit is active. If you have cards open, use them. Pay them off. Active shows that you can have a loan/line and make a payment.

Ask for credit line increases. This will help with the second item of paying down debt as it helps make your ratios to debt and income lower which is better for you!

If you need any help I have some resources that would go deeper with you here!

503.804.4379

Chris Watkins
Chris.Watkins@primeres.com
0 votes Thank Flag Link Fri Jul 26, 2013
Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.


Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.


Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.


Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.


Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.
0 votes Thank Flag Link Mon Aug 11, 2008
Web Reference: http://www.verabrodsky.com
0 votes Thank Flag Link Mon Aug 11, 2008
Depends, if you have a lot of collections, you would need to get them paid off.
0 votes Thank Flag Link Sun Jul 27, 2008
John,
Listen to all the answrers given and your score should go up. It may take a little bit of time, depending on how far you want / need it to go up.
Good Luck
0 votes Thank Flag Link Fri Jul 25, 2008
The quickest and easiest way ito improve your credit score s to contact your mortgage lender today! If you don't have a mortgage lender, ask your Realtor to refer you to the person with whom she/he most regular works. They'll explain most efficiently and effectively the things you need to do to get your credit in order as soon as possible .
0 votes Thank Flag Link Sun May 25, 2008
Review your credit report and determine how much your credit line is and make sure your revolving debts are (1) at least below 50% of the credit line and (2) 30% of the credit line. Do not close old established accounts. What strategy you use to improve your credit score will depend on what your motivation is for doing so. For more details, you can check out the article I wrote about improving credit scores by clicking the link below
0 votes Thank Flag Link Sun May 4, 2008
1. Get a copy of your credit score from all three agencies
2. Send them a letter to correct any inaccuracies
3. Call all of your credit cards and ask them to increase your limit
4. Take the credit cards out of your wallet and start overpaying them. Pay the minimum on all but the one with the highest interest rate. Once it is gone switch to the one with the next highest interest rate and so on.
0 votes Thank Flag Link Wed Apr 30, 2008
Don't close old accounts, Keep balances below 35% of credit limit, Always pay on time, Ask creditors to increase your limit but don't use it! Check your report often at http://www.myfico.com and make sure there are no errors that negatively affect your score.
0 votes Thank Flag Link Fri Apr 25, 2008
You can do a lot of it yourself. I put these free tips on my website.

http://getprequalified.com/article/104769/credit_repair/got_…
Web Reference: http://getprequalified.com
0 votes Thank Flag Link Tue Nov 6, 2007
All of the below answers...and the biggest one---live within your means. --Hardly anybody does. But this will keep you out of credit trouble. I.E.- if you own a luxury car, and a boat, but rent a crappy apartment- you are living beyond your means. Some people are able to do this and have great credit.. But this is a general rule to follow.
0 votes Thank Flag Link Wed Oct 17, 2007
Keep balances low but active on a few credit cards. Having no acitvity or only one line of credit does not provide enough history. Pay all bills timely, of course.
0 votes Thank Flag Link Thu Aug 2, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Best Free way I know is: Find a competent loan officer that is willing to pull your credit and then assist you with improving your credit situation.
Web Reference: http://www.HighRiseLoan.com
0 votes Thank Flag Link Tue Jul 31, 2007
I would also add that for long standing accounts, make sure you use the card fairly regularly or it will "fall out" of the scoring matrix.
0 votes Thank Flag Link Wed Jun 20, 2007
It’s very simple. First you need to obtain your credit report. Most services (like http://www.credco.com/) will offer you a "credit analyzer" tool, that will tell you exactly what needs to be done to improve your score, and by how many points.
Examples include:
-Paying down balances on your revolving credit accounts (like Macy’s Card);
-Paying off outstanding collections;
-Disputing a late fee that you don’t believe to be accurate;
and so on.

Good luck!
0 votes Thank Flag Link Fri May 25, 2007
I suggest working with a Mortgage Professional to review your credit report with you. You may want to use specific strategies depending on when and if you're planning on obtaining a mortgage soon.
0 votes Thank Flag Link Wed May 23, 2007
Pay your bills on time. keep outstanding balances on open lines of credit (credit cards) to below 60% of the allowable credit. Payoff or settle all "charged off" accounts and colections. Avoid judgements.
Web Reference: http://brian-brady.com
0 votes Thank Flag Link Tue May 22, 2007
Check your score.

The most important factor in raising your credit score is making payments ontime. Don't close credit accounts if you can keep them open with no balance and not pay a fee (the length of time credit is open helps determine your score and long-standing accounts look better.)

Pay off any judgements against you and if you have any late payments that are incorrect, dispute them with the three reporting agencies, Equifax, Experian, and TransUnion.
0 votes Thank Flag Link Mon May 21, 2007
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