* AR Members
I recently participated in a Housing Preservation workshop with a representative of Springboard, a non-profit consumer credit management company headquartered in Riverside, CA. They produce a variety of excellent printed materials, Q & A's and seminars and I wanted to pass along their contact information as well as well as a link to an excellent publication entitled 'What Makes Up Your Credit Score'. Available as a web file or PDF download, this booklet is a must-read for anybody thinking about buying a home and maximizing your credit score. For additional information, please read my article entitled 'More Scam Artists Trying to Take YOUR Money'.Improving your score and payment history tips:
- There are no quick fixes. You credit score is your financial DNA, it reflects many areas of your credit life but it takes time for both good and bad effects to be felt. Check your credit reports regularly.
- Pay your bills on time. If you've missed payments, get current and stay current. The weighting of late payments of the 30, 60 and 90 day type are strongly influenced by the items severity, frequency and how recent. As derogatory information 'seasons out' (i.e. 2 years for most) and you begin to use revolving credit responsibly, you can improve a negative score.
- Keep balances below 25% of the credit line on cards and other revolving credit accounts. 25% is magic, under 50% is not too bad.
- Pay off debt rather than just move it around. Don't close unused cards as a short term strategy to raise your score - keep 'old credit' active.
- Limit inquiries. Don't open too many new accounts to quickly. Apply for and open new accounts only as needed not just because you can. Mortgage and auto inquiries within a 14 - 45 day window are considered clustered and count as one inquiry.
- Use different types of credit - mortgage, revolving, installment etc. Don't concentrate all credit to one type.
- Paying off collection accounts will not remove them from your credit report. They stay around for 7 years!
- Ask your bank or credit union for information on a secured credit card - one that reports your payment history to credit reporting agencies to re-establish your credit.
- Public record filings - foreclosures, tax liens, judgments, bankruptcys and collection items are all regarded by the FICO model as very serious compared to 30, 60 or 90 day lates.
- Be very wary of 'Junk Debt Buyers' or Zombie debt. These are collection notices coming out of nowhere claiming to have bought an old medical debt or other collection item for which you are liable. Understand your rights before communicating with/or making any payments to these organizations.
- If you are having trouble making ends meet, contact your creditors and see a legitimate credit counselor IMMEDIATELY.
Remember, Don't wait to buy real estate - Buy real estate and wait.