With the collapse of the sub-prime mortgage market came the demise of many loan programs that allowed credit challenged people to qualify for home loans. It's now much harder to qualify for home loans and because of that it's more important than ever to get back to basics regarding the way we handle credit. If you are like most people your credit situation has room for improvement. These days your credit affects so many aspects of your life its incredible. Employers, insurers, romantic interests (OK I made that one up) all look at your credit. So here is a plan of attack, from industry insiders, to help you bring up your scores and save you some money.
1. Settle collections, that's obvious, but focus on collectors that agree to delete the account after they receive your pay off. A collection on your report that shows paid pulls down your score just like an unpaid collection. Be sure to get a promise in writing and send your payment by certified mail. Some agencies won't play ball, but many will, so its worth asking. Pay off the newest collections first because they affect you the most. For the collectors that won't agree to delete your account, you're going to want to pay them as well so they do go from bad to worse, but only after you've done steps 2 and 3.
2. Pay past due accounts so they are current. Do this before the account goes into a charge off status. If it does go into charge off treat it like a collection.
3. Pay down your credit card balances, to zero if possible. Leave the accounts open though because creditors like to see available credit that's not being used. If you can't afford to pay your credit cards off completely even out the balances so yo show an even ratio of credit available to account balance on each card, ie. 20% available credit on each card. If you have late pays call and ask that they remove them from your account as a show of good faith. Be polite but persistent. If you get a no ask to speak to a supervisor. If you still get told no call back in a week or two You will likely get someone else who may be more receptive to your request.
4. Keep your accounts active by making small purchases. Be sure to pay them off as you go. Use your cards once every 6 months at a minimum.
5. For maintenance purposes request your reports once a year, its free, to make sure it's accurate. Promptly challenge any lines that are bogus or inaccurate.
Stick with the program even if you don't see immediate improvement. This may not be a quick fix but it will work.
Copyright 2007 Ron Allen Fayetteville NC real estate all rights reserved
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