TIPS TO PUMP UP YOUR CREDIT SCORE
HOME LOANS, TIPS FOR BUYERS
November 23rd, 2008
Lenders would loan you money if you could fog a mirror
just a few months back but not anymore. Your credit score will determine if you are granted or denied a loan, what interest rate you will be offered and how much you will have to pay upfront. Taking control of your future requires some effort on your part to improve that single number that is a benchmark for lending-your credit score.
Start by ordering a free credit report from one or more of the three consumer reporting companies. Do not respond to an email offer or a phone call offering a free credit report. It’s a scam. There is only one authorized online source for your free credit report-www.annualcreditreport.com or call 877-322-8228. By law, you are entitled to a free credit report from each of the three agencies once every 12 months.
To improve your credit score:
- Contact the credit agency if there is any inaccurate information in your credit file. Include copies of any documents that support your dispute. Send your proof by certified mail, return receipt requested. Keep copies of all correspondence.
- If the credit agency refuses to remove the disputed item, ask the company to provide your statement to anyone that has received your credit report in the past. You can also tell the creditor with whom you have the dispute to provide a notice of your position to anyone requesting your credit profile in the future.
- If you are denied credit due to “no credit file” or “insufficient credit file” and you know you have accounts not reflected on your credit report, ask the credit reporting companies to add these to future reports. They have no obligation to do so, but may add verifiable accounts for a fee.
Negative credit information will only heal with the passage of time. These items will haunt you for seven years but bankruptcy will linger for 10 years on your credit file. Unpaid judgements will dog you for seven years or the statute of limitations, whichever is longer. Criminal convictions have no time limit. The clock starts ticking from the date the event took place.
Minimum credit scores, generally speaking, need to be at least 680 to be offered the best terms and rates. Lenders will consider many other aspects of a borrowers risk factors including job history, savings reserves and total assets. Credit scores above 720 usually allow automated underwriting and less scrutiny to obtain the coveted full loan approval.
Here’s generally how lenders view the various credit scores that range from 0-850:
- Below 600-Subprime-expect any offer of credit to be expensive
- 600-660-Workable, but likely to pay higher interest and upfront fees
- 660-700-On the cusp-with some effort, may get the best interest rate but higher fees
- 700-800-Qualify for best interest rate and lowest upfront fees
- 800-850-Sign here, loan approved!
These ranges are based on my experience and any lender will tell you all aspects of your financial profile will impact the final rate and fees, not just the credit score.
A big thank you to Eagle Home Mortgage of Redding for distributing pamphlets from the FTC that contain the information I used to write this blog.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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