Credit score

Credit score

Building good credit is a slow process and recovering from bad credit takes time. However, there are certain situations where you can do things that will boost your credit score fairly quickly.

Don’t expect to be able to patch over a bankruptcy, foreclosure or a history of seriously late payments – if your FICO score is floundering in the 500 range, it’s just going to take time to rebuild your credit. However, it’s sometimes possible to fix small dings and dents in your credit history enough to boost your credit score into a higher bracket, making it easier to qualify for a mortgage loan or obtain a lower interest rate.

Here are five possible ways to quickly boost your credit score, depending on your situation.

Correct errors on your credit report

This is the first thing you want to do, and the most important. Order copies of your credit report from each of the three major credit reporting agencies – TransUnion, Equifax and Experian. By law, you’re entitled to a free copy of your report once a year from each one.

Go through them and check for any errors related to your payment history or credit limits – missed payments that were actually made on time, collection actions over billing disputes that were settled in your favor, credit limits listed as lower than they actually are. Be alert for terms such as “settled,” “charge-off” or “paid-derogatory” on accounts you’ve paid off – anything other than “current” indicates a black mark.

Any inaccurate items should be challenged. You do this by sending a letter to the credit agency letting them know you are disputing an item, along with copies (not originals!) of any supporting documents. They must then investigate the item – usually within 30 days – and report back to you. If they are unable to resolve it, your next step is to follow up with the creditor in question, again in writing and with copies of supporting documents.

Pay down large balances

One of the things that negatively affects your credit is using too much credit. If it looks like you’re carrying too much debt, it will reduce your credit score. They way to correct that is by paying down that debt.

Of course, many people carry high debt loads precisely because they lack the means to pay it down. However, if you have savings or other funds you can tap, it sometimes helps to pay down a chunk of debt if you’re trying to obtain a mortgage or other major loan – remember, higher credit scores equal lower interest rates. Just be careful that you’re not using money that you’ll need for a down payment, since that make it more difficult and expensive to obtain a mortgage loan as well.

Divide debt among several credit cards

Even if you’re not carrying a lot of debt, it can hurt you if you’re carrying too high of a balance on any one credit card. Ideally, you don’t want to be using more than 20-30 percent of your credit limit on any one card. If you have one card with a high balance and several others with little or no debt, try using the other cards more while you pay the big balance down. You can also use balance transfers to spread the debt around several cards, but you could find yourself paying a high interest rate to do so, either immediately or after a temporary low rate expires.

Beg for mercy

You can actually do this. Creditors will sometimes agree to withdraw a negative item from your credit report, particularly if you’ve been a good customer otherwise and you ask them nicely. Called a “goodwill adjustment,” it’s sort of like getting a late fee waived the first time you’re a day or two late on a payment. However, this isn’t likely to work if you’ve had multiple incidents with the same creditor, or if it’s a really negative item. At the same time, you might be able to get two or three separate creditors to all withdraw individual minor items separately (maybe you were going through a bad period), which could give your credit score a pretty good boost.

One thing to note – you’re most likely to get a goodwill adjustment if you request it immediately after the event. It’s less likely to work if you’re asking them to withdraw a year-old late payment report.


If your credit score is getting slammed because you’re currently in a dispute with a creditor, or because the debt is in collection, you may be able to negotiate a non-report in return for settling the account. Creditors will often do this, because getting paid is more important to them than reporting the incident to credit bureaus. Just remember, you need to do this before you settle the debt – once it’s paid, you’ve lost all your Kirk Haverkamp


Minimum Acceptable FICO Scores for Homes

Your credit score is just one of the factors your mortgage lender will use to determine whether you qualify for financing. The problem is, every lender uses different methods to determine your credit worthiness. So, in some cases, a minimum score is difficult to determine for conventional loans. In other cases, especially when loans are underwritten or insured by government organizations, there are minimum credit scores to qualify.
Sponsored Link
Get the VA Home Loan
Veterans Could Qualify for $0 Down. Pre-Qualify in 3 Easy Steps Now!
Acceptable Scores

The score your lender will accept for a conventional loan can be determined by many factors, including your payment history, your salary history, your current wage, your available credit, the scores other lenders are accepting and the current economic climate. Cornett Communications advises that even in tight economic times, a score of at least 650 will get you in the door for financing.
Fannie Mae

Fannie Mae is one of two government-backed mortgage lending houses; Freddie Mac is he other. Independent lenders take many of their cues from what these two organizations do. According to the "Washington Post," Fannie Mae raised its minimum credit score for conventional loans in 2009 from 580 to 620. Even if you have a 20-percent down payment, you can be rejected if your score is below 620. Fannie Mae will also reject a loan if more than 45 percent of your income goes toward paying debt.
Quicken Loans - America's #1 Online Lender
Quicken Loans - America's #1 Online Lender
15 Yr. Fixed at 3.375% 3.770% APR $1,772/mo
30 Yr. Fixed at 4.375% 4.606% APR $1,248/mo
Government-Backed Loans

Home loans backed or financed by the Federal Housing Administration and the Veterans Administration have different views of credit scores. FHA recently changed its minimum credit score to 580, which qualifies you for lending programs that require only a 3.5 percent down payment. VA loans are 100-percent financed and set aside for active and retired military, along with their families. There is no minimum credit score to qualify, though a better credit score will get you a better interest rate.
What Your Score Gets You

Your credit score is one of the factors that will determine your mortgage loan interest rate. The better your score, the better your interest rate is likely to be. FICO, also known as the Fair Isaac Corporation, posted the differences in interest rate you may pay, depending on your score. If your score is between 620 and 639—considered a risky score by some creditors—you could pay an interest rate of 5.718 percent on a $300,000, 30-year conventional mortgage. As of mid-August, 2010, If your score is at the high end, 760 to 850, your interest rate could be 4.129 percent on the same loan. A score of 650 may net you a rate of 5.172 percent.
Addressing Your Credit Score

If your credit score won’t allow you to get a home loan now, you can so some things you can to improve your score, which are updated on a monthly basis. Make sure all of your bills are paid on time; late payments drive down your score. Pay down your credit balances; maxed-out credit accounts can also hurt your score. Also, check your credit report on a regular basis for errors. This is one of the easiest ways to improve your score. If you find errors on your report and you can prove they are errors, the credit bureau is obligated to remove them. npostins

Syndicate content