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Quick I need a better score....what to do in a pinch

I've been working with credit reports for over 15 years now. There are some basic steps you can take to improve your credit quickly. Sometimes it's simple, but often in can seem mysterious and sometimes down right depressing.

Here are a few quick tips to get those scores soaring...

If you need 20 to 30 points in a hurry...

#1 Paydown your revolving lines below 25% or 50% of the available balances on each of your cards. Make sure ask the customer service department of these companies for a letter signed by someone in accounting that will reflect your new balance. This is important if you want your lender to ask for a Rapid Rescore.

#2 Carefully examine the deregatory credit and public records on your report. Often the report is not updated by collection companies or the government. You maybe able to get those items totally removed if you have documentation showing the payoffs. Do not think that by sending a letter to the credit repository's (Experian, Trans Union or Equifax) that they'll get off any faster. For speed and a quick change in credit you need statements or receipts showing the inaccuracy of the depository.

#3 Make sure that pass addresses and employment show accurately on the report. Often the report can be affected by too many residential addresses or employers. I've done work for military employee's and they often have multiple addresses, and sometimes it helps improve the score by requesting they be changed or by proving that you only lived in one residence. DON'T LIE, but make sure that information is accurate or complete.

#4 This one works occasionaly but not all the time. Go to https://www.optoutprescreen.com/?rf=t, and read about how credit companies will often prescreen you for credit cards and other credit granting institutions. Like a do not call list, this service has been set up by the depositories to allow you to opt out of having your credit pulled. I highly advise that you do so, not only does it stop unwanted credit offers, but it also can improve your credit scores some of the time. (I've seen scores go up about 70% of the time with this system...not much, but atleast 10 points when they do.)

DO NOT....

#1 Payoff any open charge offs, collections or judgements. If the lender wants them paid off, then waite until after the credit is pulled by your lender and bank they maybe using for the underwriting decision.

#2 Do not close any revolving lines of credit. Go ahead and cut the cards in half, but PLEASE DO NOT CLOSE A line of credit if it's been open for more then a year or two.

#3 Do not apply for credit for any reason during the period of time your attempting to boost your score.

#4 Do not pay allot of money for credit repair. (Call me if you need any advice, or someone you know in the mortgage business that your trust)

FOR MORTGAGE PROFESSIONALS......If you have a client who's fico's are in the mid 600's, and you can't tell why, because they may have a number of revolving accounts under 50% balances. Make sure you check out any equity lines. HELOC's may be maxed out, and if so this is looked at as revolving credit. I had a realtor once who's personal scores wouldn't go over 680 because she had 1 of these first lien EQUITY LINES. I suggested we refinance the equity line, and her score shot up over 740 in less then a month.

Anyone who has questions on how to bump your score 20-30 points in a short period of time can call me.

Karl Christen 801-224-1031 ext 207.....

ADDITION.......check out this link if you want more information on how to create or re-establish credit....http://activerain.com/blogsview/27919/No-score-or-I

Posted by Karl Christen Credit Restoration Specialist on 12/18/2006 05:46 PM

Comments (55)

credit, credit repair, fico scores, rapid rescore, utah

55 Comments on Quick I need a better score....what to do in a pinch

DEC

2006

And here I thought you were talking about Active Rain points! Not sure if this works for credit - but comments on AR are worth 25 points. Do you think Experian would go for that?!

Karl.

What a wondeful post. I'm going to send it to all of my agents.

Lenn

Great Post. Also on the #1 for DO NOT...

Only pay off the collections that put in writing on their letterhead that they will remove the collection from their credit report forn all bureaus. Then you can use that letter to Rapid Rescorethe client in less than 24 hours.

bookmarked.....

excellent post-thanks for the bookmark!

Great post, Karl! You've been bookmarked.

I was under the impression that using any sort of credit repair service, as you allude to in your last point, was NOT a good thing to do and could be more detrimental. What's the truth here?

Karl,

Thanks for the post. Great information!

Awesome info Karl! Thanks for sharing these great tips. Getting your revolving debt under 50% is a biggie.

Karl,

Thanks for that bit of credit counseling. My husband is pretty good about screening the mail and shredding those offers, this opt-out will hopefully make that bit of extra work unnecessary. Now if I just had the $$ to paydown/payoff everything I would be a very happy camper! Thanks again.

Thank you! There were a few things that I had not heard before, so this was very useful. I always warn people against spending an arm and a leg to repair credit - it is not worth it.

Karl tip # 1 always works wonders for my clients. When they do this to more than 7 accounts at one time their scores increase dramatcially!!!!! Thanks for sharing

Great info. Some of our clients, and even a few of us also need a little patience and dedication to stick to a plan.

Super Info. I do have a question: I have heard that placing a Fraud Alert on your credit report could lower your score by 40 - 50 points. I do know someone that has recently had this happen to them. Most clients do not know this (if this is true, as I've heard). The average consumer does this if they suspect fraud. If this is true, why are they penalized. Another question if this is true, how can they quickly rectify the situation? Yur input is greatly appreciated.

Karl, the credit reporting agency that I use to pull my reports has a scoring machine that suggests different scenarios on what one can do to increase credit scores. I ran the scenario on someone the other day. It actually said that by opening a new credit card with at least a $300 limit, the score could go up 20-30 points. This is contrary to what we all believe in that one should not apply for new credit, but there it was. My client is willing to take the chance and is applying for a secured credit card. I guess we will see in 30 days if it went up.

Spectacular info for Buyers as well as their agents! Thanks for this valuable info.

Lisa

Karl....... some very good information. What's sad is that many of the credit agencies don't even know how a lot of this works.

And Jason....yes, keep us posted.

Karl, I appreciated that info, too. Its unbelievable how many offers of credit one can get in a week. If I accepted them all at once I could have a LOT of leverage. I believe some offers are scams to get personal info.

I have a client right now that will be saving over 15k a year for three years by spending 7k on her credit.

ReCert makes it's money back starting the day you close.

WARNING! While your client will be charged for this at closing, he should not be OVER charged. My client has five cards that we are ReCerting on two bureaus (her scores are too close and we need a high mid-score) and we are charging $500 to get it done in three days. If she wanted to wait just under 10 days it would have been $300. Mortgage Brokers are not Credit Counseling Services and we cannot make more that we are charged for ReCerts. That is how it is in Florida.

Also worth noting, for $10 to $15 a month, you can have daily access to all three major credit reports and scores, and checking them frequently actually helps your scores. Each of them offers this service, and I think they also all offer the credit alert service that notifies you if someone checks your credit. If you don't subscribe to that, get your free credit report copy from each bureau once a year at this site. Knowing what's on there is as important as what you do to make it look good, since a lot of things can be cleaned up if you know what they are to address. Remember, the scores they show you on these are similar to, but NOT the scores the credit report for mortgages shows (make sure your lender/mortgage broker gives you a copy of those, it's the law - Regulation Z, I believe? - when you have all that run for the loan).

You touched on this Karl, but to enhance your point, it (strangely) is better to pay all your revolving balances down to below 50% (or better yet, the 35% hurdle) than to pay off one or two of them completely and leave the others higher than those hurdles. That's just the way the point system works. Lastly, if you have time to plan in advance, PAY THEM ON TIME...ALL THE TIME, even just the minimum. It helps SOOOOOO much.

I should have asked in the last note - how do you do a rapid rescore? That's a new term to me.

Wow...thanks for the response, I guess this is what Activerain is all about.

As per some of the questions,

Brian Foxworth, your suggestion that they put on their letter head that the item will be removed is one I'll bring up with one of my contacts that I really respect who helps people with credit issues. Actually a credit repair company that can really do what they say.

Eddy Martinez, Yes the more revolving credit that is maxed out the better you'll see the score increase. I'm going to post a follow blog on long term repair that you might find interesting.

Jaclyn Erwin, I've heard that a Fraud Alert can hurt as well. I'll take that up with my credit contact as well. Good question, and I'll find out how to either remove it or work around it.

Jason Price, Yes you can always improve your score with new tradlines that are revolving lines of credit. I'm not sure about 30 to 50 points, but each client is different. Example, client has no revolving credit, score is about 580 and you add two new revolving accounts, BANG score increases dramitcally. BUT if client has lets say 9 revolving accounts, then it's going to be allot tougher to see the same result.

Suzi Gravenstuk, yes the optout service is awesome. I get ZERO offers now, and the only time I order credit is when I want it. It also gives me the peace of mind that no one else is using these offers to commit fraud in my name.

Gabriel, Rapid Rescore is actually the brand name for the credit reporting agency that I use in Colorado. But each credit reporting agency may call it by a different name....like RECERT, or RAPID RESCORE...... It does cost allot more money then a normal report and they charge by the trade line. So a 7 tradline rescore could cost a bundle. But like Christopher Farrell suggested, it could save them thousands and thousands in interest.

It works within 5 to 7 business days, and the credit reporting agency actually works directly with the Credit Bureau's and short circuits what usually takes 30-45 days to change with the depositories themselves.

The reason the service cost's so much is our friends at Experian, Trans Union and Equifax

Gabriel,

Re-Certification.

Mortgage Brokers have access to different services that provide us with "What if" scenarios. Others may also have this option but I work on the mortgage side of the fence. :)

Of course all of this is after we have approval to pull their credit. And I do one spouse at a time because that's the score I'm working on - that spouse. But you can do it for both, however there is some strategy that you have to work through before you decide which way to go; one person or both people (married couple).

This is how it works for the service we use:

1. We are emailed a copy of their credit.

2. We are also emailed a link that allows us onto the provider's site.

3. Depending on how many bureaus we paid for, we access the ones we have. We can access (pay for) more later. In my experience, we use two. Three is fine, one is not going to help but this goes back to that strategy thing. You have to have a plan.

4. We go through each person, each bureau and each item on their credit. This can take hours, days or sometimes less than an hour. All depends on the person and, you guessed it, strategy.

5. This next part is just what I do. I screen capture every improvement I make. If I tell the software to pay off this card, it will pay if off and respond with what effect it will have on that person's score. Now just because TU says it will give me 5 points if I pay this one down, doesn't mean that Experian won't lower my score.

6. With every change I make to every card and every bureau, I capture it and will later email that to the client. It usually works out to about an eight page pdf that I notate and explain exactly what I did to improve their score.

7. This is my example of what I've just explained. With my client, I selected five of her highest cards and paid them all down to $200. Then I had it calculate the payment. BAM! +90 points on Experian and +89 on TransUnion.

(And before anybody tells you they are a credit expert, have them bet you on what impact a certain action will have on their score within a 3 point range on any bureau. I've never seen anyone get better than within 5. Why? Because NO ONE, not even the bureau knows how this stuff works! :) Case in point, same customer; if she paid of her car loan in full - her score would go down by four points on one bureau and up one on the other. Okay, that make perfect sense. :?

8. Customer is thrilled! With that one scenario, I saved her a fortune.

9. Once you and your customer agree on what they should do according to the "What if" scenarios, you follow the rest of your plan. If they are to pay off X card, they have to pay it off and get a letter from the agency stating it was paid off on such and such date and we take that letter to our credit software people. Once they receive it (and plus a few dollars) the Re Certify the bureau in accordance with the federal laws that govern their agency.

10. When you pull their credit again, the improvement will be there.

WARNING! Do not let your customer do anything else in between the "What if" scenario and when you pull their credit again. Do not let them run up the charges on another card. This REALLY defeats the purpose.

We do this almost everyday. But I cannot stress enough, you have to have a plan. Granted you can start by saying "Well, let's see what this does". But ultimately you have to sit down with your customer and explain to them "If you do this..." and they will understand.

Yes, I put my loan off by about a month, but we worked out a plan and as long as she follows it, she'll have at least 15k more in the bank every year for the next 3 years.

And I now have all her business. :)

If you have any problems getting this done with your brokerage service, please let me know.

Enjoy,

DEC

2006

Awesome post! Great ways for clients to save lots of money in the long run!!!

Thanks. I have looked at the bureaus sites and they have someexcellent tips as well. I often refer clients there for the information. Those of you with your own site can set up an affiliate realtionship with the bureaus. If you refer someone there through your site and they purchase one of the credit watchdog packages, you can earn a fee as a affiliate.

Make your site work for you.

Here's one that will really show you the validity of a fico score heah...sure. Change your mailing address to a location in the upscale side of town. I thought it would be cool to have my mailing address at a very upscale location on a private island with a US post office. So I signed up and although my Scores were already more than acceptable that simple change added 25 points... But what bothers me is I already had a great address but I guess moving it to one of the wealthiest zip codes in the US says something...

Great Post !! Lots of great tips...

However some of them are easier said than done. I find that a lot of people can not afford do pay down the credit cards...that's why they use the credit cards....

I attended a seminar that was presented by Fair Isaac....The Consultant gave out an Awesome tip...He said that the best way to rapidly improve your credit score is to become an Authorized user on your Parent's credit cards that are well established and in good standing.

Karl and Chris both, thanks. Chris, your explanation was fantastic. I didn't realize you had the ability to do that. angel and I maintain scores near 800 (we haven't yet quite pushed them over that mark, Lord willing though, soon). It does matter for clients, though. Even in the $1MM + price range a lot of people would be shocked at what people's credit (and background checks) show. Any high rise condo or co-op building does the background check here, including the credit check. As for the mortgage, of course 50 points makes a difference, sometimes between yes and no and sometimes for 1/2 a point in the rate, when it lets you take them to a better lender with a special running. Thanks again both of you for those details. Despite working with two different mortgage brokers over the years I'd never heard of it, though again, we didn't need it.

Gabriel,

It's something virtually any broker can sign up for. Well, at least their office can.

And 50 points make a HUGE difference! Your big point steps are 500, 550, 580, 600, 620, 650, 680, 700, 720, 780, 800. Those are the levels where your lenders make their biggest changes or make their offers.

If you get a client that is between a pair of these numbers, this is where a cooperative and committed broker :) will get you that close.

And get you that client's friend's close, too. :)

Enjoy,

Lauren, I do talk about that in my other article, you can link to it through this blog. BUT BE VERY CAREFULL WHEN YOU DO THIS! If for any reason the primary card holder has problems paying the card, your credit will then suffer. If for some reason the person you agree to put on the card manages to get a card, you better hope they don't use it. I've known about this tip for some time, but be very cautious when you employ it.

I've used it to add tradelines to someones profile, this has helped qualify a number of people that normally wouldn't qualify with non traditional credit through FHA. Great technique, but just be carefull.

Lauren,

My version of this is even easier.

Have the person with the better score (has to be WAY better to really get any impact) get you on their card but either never ask for a card or if they do mail you one (and they most likely will, they want you to spend) just cut it up.

The trick is you ON the card, not using it. So we have it sent to the parents house and they destroy it.

Enjoy,

Christopher,

Actually it doesn't matter what the peson with the primary accounts score is, it's really what the available balance is on the credit card that you add. It needs to be less then 25% or 50% of available credit. It also is important to add the card with the longest revolving history.

Someone elses credit score has no impact on new tradelines that you may share with that other individual. I've done this technique before where the borrowing spouse has only one good credit account, but does not have the income. I then add the other spouse to that card, then do the loan for the spouse with the added trade line, who has the income to qualify for the loan.

That is true.

But we're making some basic assumptions that those are the criteria in the first place. You wouldn't proceed with this strategy if there was no preditable benefit.

I've gotten my best results from going outside the family for this strategy. Given that so far all my couples hav been on both cards already.

So we present the strategy to the potential borrower and let them decide. It does work, especially in the subprime market. Actually it has it's most dramatic effects there, upwards of 30 points and more. You will see less improvement when you get above the 550 range.

But in either case, what's critical is the plan. And some patience. Because unless your customer is willing to pay for the ReCert, it takes about 30-45 days on average. Sometimes less, but that's what I quote my customers.

Enjoy,

Christopher,

True, and I do mention what you just said in my follow up blog. Your point about sub prime borrowers is perfect. Just wanted to clarify that you hope the person your using for a piggy back has good credit, because obviously they will have the right type of credit card or account that you can piggy back your subprime borrower to, but more important then the donar's credit is that the Account itself is acceptable and has some type of history. Obviously a new credit account with a small limit and no history is going to have a smaller impact as an added account. I've found that this technique is not as potent when your working with prime borrowers, unless the doner has a large revolving balance that is free and clear, which then will then help your borrower.

I was pretty sure other people on this site new about this technique, I'm just suggesting that they don't jump into it without thinking through the consequences of adding the wrong individual or not following through correctly with a rescore. As for the ReCert or Rapid Rescore. I don't always use the donar technique but I guess you can. The last client that I added a donar trade line I waited a month for it to take, but obviously the circumstances did not require an immediate closing.

Anyway, thanks for your contributions and expertise in this matter.

Ditto.

I posted one of my responses as a separate blog (about ReCerting).

I think in retrospect there really should be two avenues of approach on credit repair for buying a house.

1. Asking the borrower, "Which do have more of, money or time?"

2. Letting them know that they can prod along at the score they have and we can get them appoved "as is." Or they can consider your "credit strategy."

But often times, as I'm sure you know, they want that house or that refi "right now." And that's where true customer service comes in. You have to give them all the info you have and at least make the effort to guide them to the best decision for them and their faimily.

But everyone in AR will back me up on this, (especially if you're a MB) sometimes you can't save people from themselves.

Information, information, information - THAT'S WHY I LOVE IT HERE....Thanks for sharing your experiences with us. This information is very useful and I will share it with others in the future.

Excellant advice. I will be sure to share with all my buyers that have this struggle

this is nice and if you dont mind I will print and share with buyers walking the line...I will even print your info- hope it can bring you business!

Chris - thanks very much for the breakpoint details. I guess we just made it on our re-fi, same with doing my parents'. No wonder things came out so well. This is all very useful for clients

This was very informative. If my HELOC is maxed out and it is a second lien, is it still viewed as revolving debt?

No.

But depending on how you structured your loan you could get a refi on just the HELOC - but that depends on which state your in. Some states do not allow "stand alone seconds" or some lenders may not allow it.

Talk to a broker from your state. In Florida, you can refi it without it effecting the first, but your 1st may have to be notified.

But now that I think about it, that may be a recent development. Maybe some mortgages that were done in the 80's don't have that "notification" clause.

In some mortgages (I'm talking subprime and/or hard money) they just want to be notified of a second or HELOC.

Christopher,

Yes, actually certain HELOC's are looked at as Revolving lines of credit. I've encountered several Wells Fargo Equity lines that show on credit reports as revolving lines, and they do affect the scores.

Karl,

Just so I'm clear... a HELOC from a particular Wells Fargo product appears as an 'R' under credit type?

Really. Huh. Because in order for that to happen they would have to be paying each month (same as all other credit debts) but when you pulled up 'credit cards' this product would appear as a 0-30/0-60/0-90.

But does that also mean that they would get hit as 'above 50%' the day after the took out the HELOC?

I'm sure your correct about this, but I've never seen it. I haven't been doing this forever, but it seems kinda scary that this scenario would pull up this way on a credit report.

You probably didn't (because there would be no reason to) but did you by any chance pull their credit from a different agency to see if it showed up there?

Either way, I'll be on the lookout for this in the future - weird.

Enjoy,

DEC

2006

Christopher,

I would be willing to show you her credit report to prove it....(LOL), but don't want to go to jail. But yes, it is crazy. I know that not all HELOC's show as revolving lines, and maybe I'm confusing the fact that she has a first lien HELOC with a 2nd lien HELOC. I'll double check tomorrow morning, but I found it odd as well. As soon as we refinanced her HELOC her scores went up, due to her other revolving accounts being paid off but still active.

Karl

I have a client who was told he could not refinance his HELOC. He was told it would only go away if he sold the house or paid it off... two mortgage people have confirmed this with him. I've never understood why, but HELOCs are not common around here, so I'm not famiiar with them.

I think that's because you're in Texas, Donna.

I don't know Texas RE laws (but I will proudly admit that I lived there for the better of 20 years and loved it) but I suspect it has something to do with your "granny laws". The ones on the books to keep "granny" from losing her home to either borrowing to much to some strange deed restrictions.

I'll look this up and post it this afternoon, unless someone beats me to it. :)

Enjoy,

Great post I will bookmark and make sure my clients read this

have you ever used a Rapid Rescore? Its a little pricey , I did that for a client this month his loan just funded today.

DEC

2006

We wish you a merry Christmas! We wish you a merry Christmas! We wish you a merry Christmas And a happy New Year! Glad tidings we bring To you and your kin! Glad tidings for Christmas And a happy New Year!

Broker Bryant and The Lovely Wife (pretend we are singing it works better like that) ROAR!

MAY

2007

I've been "perfecting" my credit repair technique for a while now and just discovered something that was really surprising. Everyone may already know this, but...

I have been working on a refi for a client that has 2 state tax liens that, although paid, are showing as still owed. One is only being reported by TransUnion and the other is only being reported by Equifax (dockets were reported wrong, liens are released by other bureaus). My client is desperate to do the refi so he can open a new retail store, so we discussed Rapid Recheck (from First American CREDCO). He was all over it. I told him it doesn't always work, etc., but he was willing to spend the money to get the public records corrected. I was shocked when we got the results back...the public records have been corrected but his scored did not move at all!

Any idea why?

Excellent credit counseling advice. Working with a customer through the hard times will create a customer for life.

MAR

2008

These days, collection companies have gotten very sophisticated with their technology and in their solicitations of doctors and cell phone companies and they are reporting 'recent activities' monthly. If this is the case, then you might as well pay off the derog because it is not going to get better. They will let you settle and then you can get that black cloud behind you.

MAR

2008

Karl,

Good post but I do take the comment about "Credit Repair Companies" to be false. You may have been misinformed or burned by a dishonest company in the past but some companies do exactly what they say they can do. Most (in my estimate about 90%) of the credit repair companies are a fraud. They lie, cheat, and run with your money. It makes it hard for me to do have a reputable business. Is it fair that I categorize you with the lending organizations that do not disclose information or follow the rules? Is it fair that I tell all of my clients to stay away from you because of some dishonest lending officers? Trust me when I say that I get customers on a daily basis that you can not help. These people have had a bad situation in there past. These are the people that you cant help in most cases. Not everyone in my profession is dishonest. There are some good companies who can help your clients.

#4 Do not pay allot of money for credit repair. (Call me if you need any advice, or someone you know in the mortgage business that your trust)

FYI We have had thousands of Loan and Mortgage officers refer multiple clients to us in the past.

We not only specialize in credit repair but also included credit "education". We also have relationship's with Chase, Bank of America, Wells Fargo Finical, WAMU, and several other companies that allow us to help customers set up new lines of credit to help assist them in the future with credit.

How about this:

Check to see if the company is Licensed with the Secretary of State and Bonded with a recognized Surety Company. Check to see if they are registered with the BBB.

We do, on average, about 500 clients per month and have a excellent deletion rate. Please do your homework in the future before you categorize an entire industry as dishonest. Thanks for your time and I hope you have a wonderful day.

Karl

Great Post!!! All seems like common sense... but you have taken the time to commit it to writing... I must confess to being to lazy to do so... thank you... you are a credit to our industry...

Excellent post. I learned alot of this watching Suze Orman years ago.

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