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March 2007
Index of all
past
Affiliate Corner columns
How to raise your credit score 100 points in 45 days
By Linda Jones,
Clarion Mortgage Capital
A credit score is one of the primary ways lenders determine whether a candidate will receive the loan they desire. The score can determine critical credit terms, including interest rates.
Raising your credit score is possible, if you take the time and care to do it. Use the following information to up your score in just 45 days – or pass the information on to clients and friends who could benefit.
Eliminate your collection accounts Did you know that paying a collection account can actually reduce your score? How is it possible? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that the all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment.
Eliminate your past due accounts Within the delinquent accounts on your credit report, there is a column called “Past Due.” Credit score software penalizes you for keeping accounts past due, so “Past Dues” destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported.
Eliminate your charge offs and liens Charge offs and liens do not affect your credit score when older than 24 months. Therefore, paying an older charge off or a lien will neither help nor damage your credit score.
Eliminate your late payments Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer that would deeply appreciate their help.
Determine your credit limit(s) and evenly distribute the balances you are carrying Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is “maxed-out.” Balances over 70 percent of your total credit limit on any card damage your score the most. The next level is 50 percent of your balance, then 30 percent of your balance.
Do not close your credit cards Closing a credit card can hurt your credit score, since doing so affects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50 percent of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66 percent of your credit.
Become an authorized user If you have a short and limited credit history, you can ask someone who is a primary account holder to add you to their account as a joint account holder or an authorized user.
Keep your old credit cards active Fifteen percent of your credit score is determined by the age of the credit file. Fair Isaac’s credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments.
For more information, or to get your free credit report, visit www.mortgage-prequal.com.
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