Recently, many lenders have raised their minimum FICO score requirements. Lenders across the board have gone up roughly 20 to 40 points from their previous threshold. Simply put, the lower your score, the harder it will be do get a loan. If you are part of that fortunate group of borrowers that are in the 700 Club with the bullet proof credit, congratulations! This blog might not mean so much to you. But it might mean a great deal to your clients or your friends or family members that might not have the great credit you do!
Some people are just within reach of these scores, but lack a few points to put them into the realm of being able to credit qualify for a loan. Here are a few tips that you can utilize to help boost your credit scores.
1) DO NOT close your good accounts, regardless of their activity. If you haven't used a credit card in years, and have no plans on using it, don't close it. Since length of your credit history factors into your score, it's vital to keep ALL positive accounts open and in good standing. If you're afraid you may utilize that account, store you credit cards in a safe place.
2) Raise your credit limits. I know this sounds crazy, but if you can't pay down your debts to acceptable ratios, raise your limits. This will make a drastic improvement to your score. This increase will lower your ratios considerably (if you're not maxed out). Be sure that they can do it without pulling your credit to ensure maximum point increases.
3) Make sure they are reporting your credit limits correctly. So many times I see that the limit is actually the highest balance a client has ever had. Some bureaus incorrectly display the high balance and not the true limit. In other words you may have a $5000 limit, spent $3000 and still have a $1500 balance. This is not accurate. You are getting dinged at having a 50% ratio when in reality it's a 30% ratio. (Do you see them points just moving on up?)
4) DO NOT apply for a bunch of loans. If you're looking for an auto loan, make sure that they use the initial credit report if at all possible. I had a client that had her credit pulled 35 times in 4 weeks and she only went to 3 dealerships. Typically, the bureaus will consider pulls within a 2 week period as one pull. The key word is typically. Same thing if you are finding a mortgage. If you're rate shopping and the lender pulls your credit, make sure you do it within a 14 day period. Period! Too many inquiries at one time and too many new accounts take a ding to your score.
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