Fair Issac: http://tinyurl.com/5bbznk
Now having said this, it is very important for you to understand that you should complete this process under the direction of a lender â€“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 youâ€™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 â€œearly bird gets the wormâ€ 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 â€œset your mind at easeâ€ (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 youâ€™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 canâ€™t substantiate their financial position? The phrase in the Jerry McGuire movie I believe was "show me the money."
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!
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!
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.
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.
-Paying down balances on your revolving credit accounts (like Macyâ€™s Card);
-Paying off outstanding collections;
-Disputing a late fee that you donâ€™t believe to be accurate;
and so on.
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.