Your credit could be the 'death' of you if not properly watched over. Better yet, if you don't understand how credit works and how it gets reported, this can sometimes hurt you even more.
In Part 1 of your credit, Free Credit Report & Credit Repair companies -- BEWARE !!!!! -- Part 1, I stressed the importance of being sucked into such advertising as 'free credit reports'. You specifically need to understand what catches there are to when obtaining your 'free' credit report. You need to read the small print.
It sometimes doesn't matter how good of a person that you are, but your credit will play an important role throughout your life. It doesn't matter if you are buying a home with a FHA mortgage or a conventional mortgage, you need to know what helps. Not only to purchase or refinance a home, to buy a car, but even now when purchasing homeowners insurance or car insurance. What can you do about it? Well, I hope to help you with some credit tips, possibly getting you back on track. Just keep in mind, these tips are my opinions, but from over 15 years of experience in the mortgage industry.
CREDIT TIPS & KEY REMINDERS..........
- Shopping for a mortgage. Some lenders will tell you not to allow nobody else to pull your credit report because it will hurt you. Yes and no. You can have as many lenders pull your credit in 14 day period when shopping. This is a fact. But, still pick and choose to whom pulls your credit report. It could still come back to haunt you. And when a lender pulls your credit report, make sure you
- Don't kill those old credit cards. The credit software programs assume people that have had credit for a longer period of time are at less risk of defaulting on their payments. 15% of a credit score is determined by the age of the file. Use your cards every 6 months, even if you keep a small balance. REMINDER : An inactive account is given less weight in regards to your credit score. Even if you had a perfect payment history on that card.
- Settling unpaid collection accounts less than 24 months old. There are so many rumors on how to treat collection accounts. Typically making payment on a collection account less than 24 months old, the credit score will either stay the same or increase a few points. So many loan officers make statements that if you pay this off, your score will increase a lot. Fiction. Keep in mind, many collection agencies will take less than what you owe so negotiate with them. Start at 50% of the owed amount. Once an account goes beyond 24 months you need to be careful when settling because the account may erroneously have the date of last activity updated to the current date and bring the score down as a result.
- Getting rid of your past due amounts. Within the delinquent accounts on your client's credit report, there is a column called "Past Due". Credit Scoring software penalizes clients for keeping accounts past due, so past dues destroy a credit score. Once you are aware of this, pay that "Past Due" amount as soon as possible.
- Getting rid of your late payments. Can this happen? You never know until you ask and or try, right? This part can take some work and persistence, but it can work. Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on their account. As I mentioned, be persistent and remind the creditors that they have been a good customer and would deeply appreciate their help.
- Asking for a credit increase and balancing your credit balances. The credit scoring systems like to see borrowers card credit card balances as close to zero as possible. Showing that they can be trusted with a lot of credit. If you can increase your credit limits, this can help also. The credit models love to see balances less than 40% of the consumers limit. There are certain percentages of your credit limit to balance that can hurt or help your credit score. Maybe distribute your balances with other cards that have lower balances. A definite no no.... if you go over your credit limit, this will severely hurt your credit scores.
Summary : Keep in mind, these are some basic tips when it comes to keeping your credit scores in check. And that these are facts that I have gained knowledge of from other credit agencies. But so many things aren't always written in stone because you have 3 major credit agencies in which each has their own models in how they report your credit. One important thing that I want you to keep in mind. Paying off your credit cards before buying a home will actually hurt your credit. You always want to keep some sort of small balance.
The Series on Credit Reports :
Here are some more posts with some credit tips.
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For more information on FHA loans, please go to this link. The FHA Expert You can also go to this group : The FHA Mortgage Group
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
Copyright © 2007 by Jeff Belonger
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