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How Can You Improve Your Credit Score?

If you are planning to apply for a mortgage soon and you feel that there could be some issues to deal with, it is prudent to pull your own credit (inexpensively) ASAP in advance. Often the process of correcting a few derogatory items takes 30-60 days; if there are an excessive amount, they can take 6 to 12 months to correct.

If you feel that your credit file is ok or there are only 1-2 minor issues that you have documentation from the creditor stating that they are correcting or clearing the derogatory item, it is feasible to go directly into the mortgage application process, which involves pulling your credit. If there are minor issues, these can be easily handled by a competent broker for a small cost; lenders will not normally want to go to the bother, or the loan officer is often not knowledgeable enough to know that they are easily dealt with in a timely manner.

Strategies of Maintain High Credit scores?

Make sure that your information on file with the three credit reporting repositories (i.e. Equifax, Experian and Trans Union) is accurate and up to date. Order a copy of your credit report at least once a year, and dispute any inaccuracies in writing.

Credit inquiries over the past 2-years affect your credit score. The ones occurring over the past 90-days affect your score the most; your score will slowly rise as each month passes if inquiries in current month are less than the number of inquiries 3-months ago (i.e. new month causes the back month, now the 4th month, to fall off as the current month becomes 3rd month). The same applies with inquiries 24-months ago.

Recent changes in the law have made credit report inquiries not count so much. A series of like requests (e.g. 4 mortgage inquiries) will be treated as one request if made in a 30-day period; this time period may be as high as 45-days according to credit bureau personnel. The change is the result of credit bureaus and lenders (finally) realizing that smart consumers shop around for the best mortgage or auto loan.

Credit card solicitations you receive in the mail do not count against your credit report, unless you actually call the company (or mail in the request) giving them your social security number.

Repair your credit today with Lexington Law

The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings, collections, judgments and foreclosures (i.e anything that is derogatory), stays on your credit report for 10 years, can significantly reduce your credit score. It's never a good idea to take on more credit than you can handle.

Late payments work against you. It's extremely important to pay bills on time, even if it's only the minimum monthly payment. If you are unable to pay all of your bills one month, PAY THE MORTGAGES and sacrifice your credit card ratings. A mortgage late is considered the "kiss of death" in the mortgage industry; a mortgage late will haunt you for 1-2 years, making it nearly impossible to obtain mortgage financing without having to go to the loan sharks.

Don't "max out" your credit lines. The balance on your open revolving and installment accounts is a factor, meaning that lower balances are better. It is best to maintain balances that are one-third or less of the size of the credit line. If you have charged up your cards during the month, try to pay down your cards on-line a couple of days before the statement cutoff date; the balance outstanding on the cutoff day is the balance that will show on your credit report after the first week of the following month.

By managing your credit wisely, it's possible to add 30-70 points to your score.

CONSUMER REFERRAL CONTACT INFORMATION

Bureau	Address	Phone
EFX	EQUIFAX CREDIT INFORMATION SERVICES INC. P.O. BOX 740241 (ORDER A REPORT) P.O. BOX 740256 (DISPUTE AN ITEM) ATLANTA, GA 30374 WEB SITE: WWW.EQUIFAX.COM	(800) 685-1111
XPN	EXPERIAN - NATIONAL CONSUMER ASSISTANCE CENTER P.O. BOX 2104 (ORDER A REPORT) P.O. BOX 9701 (DISPUTE AN ITEM) ALLEN, TX 75013-3742 WEB SITE: WWW.EXPERIAN.COM	(888) 397-3742
TUC	TRANSUNION CONSUMER SOLUTIONS P.O. BOX 1000 (ORDER A REPORT) P.O. BOX 2000 (DISPUTE AN ITEM) CHESTER, PA 19022 WEB SITE: WWW.TRANSUNION.COM	(800) 888-4231

References:

Your Credit File - ILG Article
About Credit Scores
The Secret History of the Credit Card - Eight Things A Credit Card User Should Know - PBS Article
Sign Up for Low Cost Credit Repair with Lexington Law - I recommend this company. They get the job done and do not charge you an arm and a leg. Also, since you do not have to commit to a contract, you can cancel any month when you think your credit is good enough.
Credit Reports - One of the most reasonably priced companies to get a tri-merge credit report with "mortgage" FICO scores, and it is an inquiry that does not affect your FICO.