In Today's lending environment, a minimum of a 620 is needed to obtain a mortgage. Here are a few of my favorite tips on increasing credit scores quickly.
•1. Evaluate Collection Accounts - You probably didn't realize that paying off a collection account can actually lower your credit score. That's because the credit score software evaluates based on most recent activity date. When you send in a payment to pay off a collection it's reported reflecting the payoff date as a "paid collection". Since credit score software reflects the date of last activity, it sees the payoff as recent collection activity and it actually can lower your score. What's the best way to deal with a collection to maximize your score? Contact the collection agency and explain you are willing to pay off the collection under the condition that all reporting is withdrawn from the credit bureaus. Make sure you request a letter in writing confirming your agreement. Not all collection agencies will remove references to the collection account, but many will. It's worth the effort as this can dramatically improve your credit score.
•2. Evaluate Your Credit Balances And Limits - Balances over 70% of your available limit will do the most severe damage to your credit score. Try and at least get it to 50% with 30% or less being your optimum level. You can either pay down your balances or redistribute the balances over several cards to minimize damage.
•3. Don't Close A Credit Card Account - Even if you don't have a use for the card any more, don't close it out. Your credit history and length of having credit will impact your credit score. Closing a credit card account you payoff will eliminate how the software evaluates how long you've had a piece of credit and will actually lower your credit score.
One more Tip (OK......FOUR TIPS...., who's counting anyways)... You can a request a Free Credit Report every 12 months through www.annualcreditreport.com
It is wise to check your credit every year to see if there are any posting errors, duplicates of accounts and just to verify the credit liabilities belong to you that are being reported on your credit report.
If you have any questions, please contact Stephanie Stringer with Ameripro Funding. Stephanie has worked with many satisfied home buyers for over 15 years.
Stephanie Stringer
469-556-0894
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