IMPROVE CREDIT SCORE PLAN
Credit Score Improvement Plan
Get your credit report- hopefully with a FICO but not mandatory yet. Thanks to an act of Congress, you can download one free credit report each year without your FICO score at www.annualcreditreport.com. Here’s a chart of 12 credit cards that offer free credit reports with FICO Scores to their card holders. Next, if you find any errors on your credit report, even small ones, correct the credit reporting agencies immediately. Each agency will tell you their procedures to get inaccurate items corrected. Statistics say that over 20% of Americans have errors on their reports so challenge this inaccurate reporting.
Pay Down Debt
Meet with a Home Lender for a free consultation. Take your credit report with you. The lender will calculate if you are better off paying off credit cards or paying down loan balances instead of putting down a larger down payment. Car loans with 10 or fewer payments left don’t count in your debt ratios. Lower debt means you’ll qualify for a higher loan amount. Remember to keep your home loan in your comfort zone vs. what you qualify for.
The theory is to pay off small credit card balances and close those cards. Keep using 1-2 major cards – you need open credit lines. Department store credit cards – even with a zero balance – will have the minimum payment added to your ratios. Juggling money by maxing a card limit or transferring one credit card’s debt to another will lower your credit score.
Waiting Might Help
A 12 month payment history is reported by each creditor. If you had a hard time with on-time payments several ago, waiting should remove them and raise your score. There are Home Loan plateaus like “over 720” and “under 680” that determine the interest rate you pay. We suggest having a free consultation with a home lender to get some guidance about your unique situation.
Avoid Finance Company Loans
FICO Scores are make up of many factors and no one knows the exact formula. One of the things they do know is that finance company loans lower your score. Since their interest rate is usually higher it’s considered a sign of poor credit management to a home underwriter.
NOTE: DO NOT MAKE NEW PURCHASES UNTIL CLOSING ON YOUR HOUSE
Pay Attention To This! Do not buy a car or home appliances or furniture or spend cash until you own your new home. Spending money and creating debt will increase your debt ratio, lower your reserves and/or lower your credit score. Because you are unique, at least agree to consult your home lender FIRST.
Shop For Mortgage Rates On The Same Day
Credit report inquiries can lower your FICO score. We suggest getting your credit score and calling 3 lenders/banks for rates all on one day. By giving them your average credit score number, they can use that to quote interest rate and fees. Whatever lender you choose can then run your credit and get you pre-approved. Our suggestion is that you get quotes from your Las Vegas credit union or bank’s home loan division, a friend’s home lender and a lender we refer you to. Beware – large banks give very slow service and a borrower must fit into the perfect customer box to be approved.
This blog was written by Terri Grosse. Terri has been a Top-Producing Las Vegas Valley Real Estate Agent since 1993. She and her husband/partner, Kurt provide quality service and protect their clients with their knowledge and building expertise. Contact Terri and Kurt today for an appointment at 702-656-1818.