- The 3 major credit bureaus, TransUnion, Equifax, and Experian allow you to obtain a FREE credit report each year directly from them or through www.annualcreditreport.com It is estimated that up to 2/3 of all credit reports have some type of error such as account information, personal name, address history, etc.
- Any accounts that are being disputed may be required to have the dispute verbiage removed. This can take time, so addressing up front at time of pre-approval is critical.
- Should you need to acquire the services of a credit repair company, be very cautious as many of them will do very little for what you pay them. Always identify how long the company has been in business as well as any references they may have.
- Do not close your accounts once you pay them off. This is a common mistake. Your scores will increase based on the increasing amount of available credit you have that you do not use.
- In order to begin to increase your credit scores, attempt to pay down your balances to 50% of the available credit limit; then to 30%, then to a $0 balance. Depending on your overall credit situation, this process may gradually increase your scores.
- If you are in the process of buying a house, paying off an old collection will more than likely not increase your scores, and may actually lower them. In the eyes of the credit bureaus, you have just brought an adverse item to a current status. In many cases it is better to have an old collection with a balance than to bring in up to date with a $0 balance.
- Time is your friend. Continue to pay your accounts on time. While everyone’s credit situation is different, as time passes, old derogatory accounts will have less of a negative impact on your scores.
- Applying for credit accounts on a regular basis can have an adverse affect on your credit scores. Keep in mind, if you are buying a house a mortgage company will need to access your credit at some point to properly qualify you and to determine your interest rate. Keep your credit inquiries to a minimum. Having a credit report pulled once a quarter or so will more than likely have very little impact on your scores.
The Mortgage Gallery has a credit score improvement model which provides the potential score increase amount upon paying down specific accounts. This is for clients that may be a few points away from qualifying or for obtaining a little better rate, not for those with scores that require significant credit assistance.
- Protect your identity!!! Identity theft is rampant. Always shred documents that have personal identification information before throwing away. Identity theft can have a devastating effect on your credit and can take many months to clean up.
Thanks to Mike Banes, one of our awesome lending partners for providing this great information. If you're thinking about buying a home this year, call Mike to get prequalified for a loan, and then call Bruce Lynn to start shopping for a home. Search for homes in the DFW Metroplex at www.MetroplexHomeSalesInfo.com or download our app at www.CoolRealEstateApp.com to get homes on your smartphone.
Mike's contact info: