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“Ways to Improve Your Credit” Series

February 22, 2012

Part 2

As noted in last week’s blog, this is a multiple-part series detailing ways that you can improve your credit or raise your FICO score. Although there is no quick credit fix, meaning that it won’t happen overnight, there are ways to get a definite improvement over a 30, 60 or 90 day time frame. This is why it is so important to start reviewing your credit file long before you plan to purchase a home. With tax season in full bloom and borrowers waiting with bated breath for their tax refund checks, real estate agents and MLO’s should begin to see a surge in prospective clients. However, for many of them, those dreams will be deflated quicker than a whoopie cushion when they finally get around to having their credit pulled, only to find that their credit is so bad, they can’t even get a stick of gum on credit from the corner store. So what happens now? Here you have a dilemma that is quite common in our field: you have a borrower with a suitable down payment, but a credit score that not even the neighborhood loan shark will touch. What to do, what to do?

At this point, the only thing that can be done is try to get the borrower’s credit file up to snuff. This might not be an option for everyone, especially for those that have a bankruptcy or foreclosure floating around on their credit report; for them, the wait will be 2 years from the date of discharge on the BK, and 3 years from the date the foreclosure was recorded. However, if the issues appearing on the credit have more to do with old collections, late payments that are over 12 months old or erroneous reporting, there is still a glimmer of hope for them.

Now, let’s get down to the brass tacks, as they say, and let’s discuss ways to effectively raise a FICO score enough for a lender to even entertain the file. There are several ways to do this, let’s discuss a few of those options now.

Tips to raise your credit scores

Get added on as an Authorized Signer- if you have a way to get yourself added on to a relative’s card as an authorized signer, this can sometimes help boost your scores. However, please keep in mind that the creditor might not report on your credit report in all cases, but if they do and the card holder defaults, it might affect your credit rating negatively. Another thing to keep in mind here is that you don’t want to get yourself added onto a card that is maxed out, otherwise there will be no tangible benefit to you.

Add paid accounts to your credit file– If you bought furniture from a neighborhood store, chances are that they may not have reported on your credit file. If you made on- time payments on the account for more than 12 months, this can help boost your scores. You would need to ask the creditor to report it to the bureaus. Again, this only works if you made all of the payments on time.

Get outdated negative items removed- Most credit items are only supposed to be on your report for 7 years (BK’s and Foreclosures are 7 and 10 years, respectively). If you have a negative items that is older, you can ask to have it removed. The less negative items on your report the better. Also, watch out for accounts that get “re-aged.”

Make payments that are more than your scheduled payment– If your scheduled payment is $25 per month, send in $30 instead. This is one way to get the creditor to extend more credit sooner.

Ask the creditor to raise your credit limit- This usually works best when you incorporate the previous tip of paying a little more than the scheduled payment. If you have a history of paying on time with the creditor, you can call in and ask them to raise your credit limit. This is one way to quickly raise your available credit and make the percentage of used credit look like less than what it actually is.

The better your credit file looks, the more options you will have when it comes time to apply for a home loan. The key is to start prepping your credit file long before you actually plan to purchase a home. Don’t be caught like a deer in the headlights when they pull your credit and your FICO is hovering in the 480 range. Be pro-active, be diligent and most of all, be in control of your credit at all times.

If you have questions or want a fresh perspective on one of your files, give me a call to discuss.
We make your success our main priority!

Melba Baquero
Broker Associate/MLO
DRE 01354095/ NMLS 255430
cell 559-273-5012
office 951-777-4460

FOR A FAST PRE-APPROVAL: 
http://pmcmortgageloans.com/mortgage_application.php

First, complete out a loan application on our website
-Go to http://www.pmcmortgageloans.com
-Click on Apply Now at the top
-Scroll to the middle of the page and Click on 3. Full Application
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