Repair Your Credit Score
Anchorage Real Estate Blog
Things happen, life happens, mistakes happen and your credit score is usually affected. A credit score is very important when trying to get financing for a home loan. Think of your credit rating as your financial report card or GPA. The higher your score the more credit worthy you are. Many, many things can affect your credit score negatively, such as late payments, overusage of credit line, and bankruptcy.
If you are in the market for a home in the near future or even next year, keep in mind that most lending institutions require a minimum score of 620 right now. However, if your credit scoresis below 620, don't despair, there are ways to repair a damaged credit score.
Before I list the different ways to repair your credit score, I want to warn you of scammers that may promise you that they can raise your credit score overnight or in two short weeks. You can fix your credit score yourself through these methods:
1. Print a free credit report from Annualcreditreport.com so you can find out exactly what is going on with your credit. It's important to know if there is something fraudulent going on or if there is a mistake on your credit report. If you discover incorrect information on your credit report, contact the three credit burueas immediately to resolve the issues. This alone can raise your credit score quite a bit. Some things you might want to look for are: accounts that you didn't open, a balance showing on a debt that you've already paid off, etc...
2. Get your accounts current- If you have any past due accounts that are legitimately yours, it's important to bring these up to date. Your payment history accounts for a big chunk of your credit rating. If you are having trouble making payments, call the debtor to set up a payment plan.
3. Get your credit usage ratio in check- Your credit usage based upon your available credit accounts for about 30% of your credit score. Try to keep your ratios at 50% or less, 30% is ideal. Pay down maxed out credit lines and work on getting the debt below 50% of the available credit. With the economy and credit card companies changing rules so rapidly nowadays, this is more important than ever. Many credit card users are seeing their credit lines slashed in half so this bit of advice can be hard to accomplish right away, but it can be done!
4. Don't close out your credit lines- After paying down your credit cards, it's important that you don't close them out. The open credit lines can help with your ratios, especially if you have a long credit history with that card. The longer you have a credit line open, the more valuable it is to your credit rating.
5. If you do not qualify for a loan or credit card, open a secured credit line- A secured line of credit is usually a credit card that can be issued by your local bank with a credit line that equals the amount of money you have set in an account at that bank. This protects the bank, if you happen to not make your payments. Your deposit will secure the loan for you. Why is this important? You need some type of good credit to raise your score. Think of a see-saw, you have negative credit on the one side weighing that side down, you will need about that much good credit in order to bring the see-saw into equilibrium.
If you have bad credit right now, utilizing these 5 steps will take your credit score to the next level. I've seen people implement these steps and purchase a house, all within 6 months. Don't let a damaged credit score stop you from ever owning a home. Call Vanna for more information about the Anchorage Real Estate Market 907-720-4663
Thank you for taking the time to read my Blog.. Visit my at HomesByVanna.com for more real estate information or to search the Alaska MLS...
Comments(2)