Thursday, March 24, 2011

Buying a home/investment property.. 5 quick tips for improving your credit score

It is not easy to increase your credit score but a good rating is essential for a number of life choices including buying and obtaining a mortgage. Although not an easy process, the logic behind increasing your credit rating is quite simple. Make sure that you pay your bills in a timely fashion, reduce debts, and eliminate inaccuracies which would negatively affect your report.
The following are a series of 5 tips that will help you to improve your credit score.

Correct Inaccuracies

All credit bureaus need to correct any errors in the reports. Because the credit score is linked to the credit report, it is essential to review the report from all different credit bureaus in order to ensure accuracy before applying for a mortgage or another form of loan.
If you find a mistake in the report, contact the bureau in order to explain what is wrong with the information. It can take up to and occasionally over 30 days to correct the mistake so plan well in advance.

Pay the Bills in a Timely Manner

The most important feature that determines the credit score is payment history. It consists of 35% of the score. Recent history is considered first so making all payments in a timely manner is an excellent way to improve the credit score. One payment being missed can decrease the score by as much as 50 or 100 points. Additionally, open credit accounts that have been unresolved can hurt the credit score. It is essential to settle these accounts and close credit accounts that are not being used.

Reduce Credit Balances and Adjust Limits

Pay Down Credit BalancesMake sure that the balance on the credit card stays within 20% and 50% of the total limit. For the most part, the lower the balance, the higher the score. Lenders want to see that that there is a significant amount of room between the debt amount and the total limit.
Because of this, it is not beneficial to consolidate balances and raise the ratio of the balance to the limit. It is far better to have lower balances on different cards than a higher balance on only one card. In order to lower your overall balance ratio, increase your credit limit. But make sure that you do not take advantage of this money and spend it.

Credit Counseling

You should consider working with an agency in order to obtain a debt repayment plan, particularly if you find that you are suffering with high-interest debt and may fall behind in payments. These services may be able to negotiate a lower rate and pay off the bills within only a couple of years.

Avoid Bankruptcy at all Costs

Bankruptcy is highly detrimental to your credit score. If an individual has good credit but undergoes bankruptcy, it is possible for a person to lose over 200 points. It is quite difficult to recover from bankruptcy. After a score has decreased to less than 620, it is far less likely that a mortgage or loan will be able to be obtained.

For more info on a mortgage professional to speak to or to purchase residential or commercial real estate. Call Ron@ any of the multiple forms of communication below..

Ron Goldstein, MBA
Transnational Referral Certified(TRC)
Quality Service Certified(QSC)
Broker Associate
Prudential RUBLOFF Real Estate
cell (312)771-7190

Carpe Diem.Today is your day!...
Certified Eco-Broker

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