Part 1 of this series can be found here: 9 Easy Steps To Getting The Best Rate (and Lowest Payment) On Your Next Mortgage (Steps 1-3)

Part 3 is here: 9 Easy Steps To Getting The Best Rate (and Lowest Payment) On Your Next Mortgage (Steps 7-9)

Bad credit CAN get better, and good credit can become GREAT credit!

Step 4

Background:Total ratio and individual ratios. The FICO scoring models are known to place high value on credit utilization ratios. Both your total credit utilized to total available credit ratio and each individual revolving account ratio should be below 50% utilization; better still, below 30%.

Your Assignment: Examine both your total and each individual balance ratio. Stay below 50% at worst, 30% is much better. 15% is MUCH better; and for EACH account, not just the total. The obvious strategy if balances are too high, is to pay them down. And that always works; no question. There are a couple of less obvious solutions, though. First is balance transfers from high ratio cards to low ratio cards. Silly as it sounds, that can have a major positive impact on your scores. Second; if you have a good payment history with a particular credit card account, you can ask the card issuer to increase your credit limit. Ask them if they will do it without pulling your credit, though, as so you can avoid any unnecessary credit inquiries.

Step 5

Background: Some credit cards do not report limits, hurt ratios, Credit limits are always round numbers. Sometimes indicates an instance of going over the limit, sometimes it is just the maximum balance ever charged on the card and the creditor is not reporting the limit.

Your Assignment: Look at each of your revolving credit limits on your credit report. Look for odd numbers. Ask your card issuer to report the correct limit. If you are applying for a mortgage soon, ask your mortgage professional to perform what's known as a Rapid Re-score on your credit, forcing the new correct info into your credit profile.

Step 6

Background: If you have had a Chapter 7 Bankruptcy... you may be continuing to be punished by the creditors. Many creditors will continue to report a current Date of Last Activity. Not only is this incorrect, it is illegal. We'll just assume it's inadvertent on the part of the creditors, but it happens an awful lot. Bottom line: This can kill your scores. Having each of your Included in Bankruptcy tradelines reporting correctly can make as much as 100 points in your credit scores difference almost overnight.

Your Assignment: Examine each credit tradeline that was included on Schedule F in your Bankruptcy papers, and compare it to the listing in each of your credit reports to make sure that date of last activity shown is no later than the date of filing, that the balance is zero, and the status is listed as Included In Bankruptcy. Anything other than that (ZERO Balance, DLA=Filing Date, Status= Included In Bankruptcy) is inaccurate and is harming your credit. When I went through this very process myself about five years ago, just getting this part right raised my mid-score from 529 to 632 in 10 days. And this was less than FOUR MONTHS after discharge.

Best Regards,

Temecula, CA No Down Home Mortgage Loans