The Handy Dandy Guide to Improving One’s Credit Score

One’s credit is very important when trying to obtain mortgage financing. The following are some helpful hints to improve one’s credit scores. Normally the financial institution uses the middle score of three scores from each major credit bureau to determine credit worthiness.

Here are some important Steps to Take:

1. Acquire a credit report from all three major credit bureaus:

www.transunion.com
www.experian.com (provides a free report from all three!)
www.equifax.com

2. Remove any outdated credit. With the exception of bankruptcies, foreclosures and public records, all credit drops off after 7 years. Request this in a formal letter to each credit bureau.

3. Delete any inaccurate information. Formally request any erroneous information removed in accordance with the provisions of 15 USC Section 1681i of the Fair Credit Reporting act of 1970. Upon receipt of complaint letter, the creditor has 30 days to investigate or the item is deleted from the file.

4. Explain delinquent payments to creditor. Declare that payments are prompt historically and since the late occurred for reasons beyond one’s control, please remove delinquency. It is important to reflect good relations with the company because the corrections are more representative of one’s financial status.

5. If the credit reports is accurate; do the following to improve one’s score:

a. Pay off any collections, charge-offs or judgments. Ensure credit reports reflect the pay-off!
b. Pay down those credit cards that are near their maximum credit limits. Ideally, pay them down to 50% of max limit.
c. Do not close any open trade lines or pay off debt entirely. Possessing open credit is good!
d. Pay down installment debt to 10 payments, if possible, and this will eliminate that debt from debt ratios (again do not pay off).
e. Get credit! One needs at least three open credit lines for a 12-month period to achieve one’s best score.
    No credit = bad credit

Be patient but do not hesitate to follow up with creditors! Your middle credit score may dictate what rate you receive from the mortgage lender.

This information is courtesy of New England Regional Mortgage at 800-220-0959!