Worried about Your FICO Score? 4 Easy Strategies to Fix It Up

If you’re worried about your bad credit, you’ll want to do everything in your power to improve your rating as quickly as possible – especially if you have a major purchase coming up. Improving your credit rating can give you access to better interest rates on mortgages or even help you get that job you’re after.

IMPORTANT! If you are currently involved in a home loan transaction, speak with your trusted mortgage lender before taking any action regarding your credit!

So how can you boost your FICO score quickly and easily? Here’s what you need to know.

Get Your Credit Report And Dispute Any Errors
Credit reporting agencies don’t always keep 100% perfect records, and there’s a good chance that your credit report contains at least one error. One recent FTC study found that 25% of consumers have an error on their credit report and that in 5% of cases, the errors were actually severe enough to impact the loan terms that borrowers were able to negotiate.

You can get your annual credit report from all three credit reporting agencies for free. Carefully read over it. If you see any errors – if your name is misspelled, if they have the wrong address on file, or if there are late or unpaid charges that you didn’t make – you can dispute the items in question.

Still Overdue? Negotiate Payment Terms With Your Creditors
If you’re overdue on a payment, it will weigh heavily on your credit score. As your payment history makes up a full 35% of your FICO score, this is one area where you’ll want to invest a great deal of time and effort.

Contact any creditors you owe money to and ask if you can negotiate your bill. The ideal outcome for you is to have the creditor report your debt as paid in full, so see if you can secure that promise in writing in exchange for an accelerated payment schedule.

Try Maintaining A Lower Utilization Ratio
Your utilization ratio refers to the amount of credit you use at any given time. If this number goes beyond 30 percent, you’ll start to see your credit score drop. Ideally, you should aim for a utilization ratio below 10 percent – this will prove to your lender that you can responsibly pay for the credit you use.

Have Recurring Bills? Automate Your Payments
Automating your monthly payments can be a great way to boost your credit score. Whether it’s your mortgage, your credit card, or your student loan, a pre-authorized monthly payment will ensure that everything gets paid on time and give you a great credit history.

Your FICO score is a number that will determine your eligibility for mortgages and other loans. These are general tips to help with your credit score and improve the overall reporting of your credit.

Call your local mortgage professional to learn about what kind of a mortgage your credit score can afford you.

What Is A High Enough Credit Score For A Mortgage?

What Is A High Enough Credit Score For A Mortgage?There are many people who are interested in purchasing a home for the first time. Even though many first-time homeowners are interested in the sticker price of a home, it is just as important to consider credit scores. Anyone who requires financing to purchase a home will have to go through a credit check. What credit score is considered high enough for a home loan? What do people have to do if they want to increase their credit scores?

What Credit Bureaus Do Lenders Use?

First, a credit score is a reflection of someone’s overall financial health. A lender wants to make sure someone has the ability to pay back a mortgage before they give that person a home loan. The higher someone’s credit score is, the more likely the lender believes he or she will have that loan repaid. 

In general, there are three major credit bureaus. They include Experian, TransUnion, and Equifax. Most lenders are going to run something called a triple merge (or a trimerge) when they check someone’s credit. This means the lender is going to check someone’s credit score with all three major credit bureaus before deciding if someone should receive a home loan. All three major credit bureaus calculate credit scores using the Fair Isaac Corporation, or FICO, numbers, but they calculate credit scores slightly differently. 

What Is Considered A Solid Credit Score?

Every lender has a slightly different metric, but a credit score less than 580 is considered poor. In contrast, a credit score over 800 is considered excellent. The maximum credit score someone can have is 850. If a loan is given to someone with a score under 620, this is considered a “subprime” loan. It is possible for people to qualify for a home loan with a low credit score, but they may be facing a higher interest rate.

Those who are interested in raising their credit score should pay all of their bills on time. It is also important for individuals to pay down as much of their debt as possible before applying for a home loan. This could help them increase their credit scores and get approved for a loan with a solid interest rate. 

 

A Late Payment: Credit Score Impact

A Late Payment: Credit Sore ImpactThis has been a difficult year for everyone. There are a lot of people who are worried that they might not be able to keep up with their mortgage payments. Small businesses have had to close their doors and numerous individuals have been laid off from work.

It is important for homeowners to understand that banks do not want people to foreclose on their homes either. Therefore, they are often willing to work out an alternate payment plan with homeowners who are struggling due to dire financial situations. Those who are late on a mortgage payment might be wondering how this is going to impact their credit score. The answer is that it depends. 

How Does A FICO Credit Score Work? 

Someone’s credit score is a conglomeration of multiple factors including payment history, the amount of money owed, the length of the credit history,  and new credit. A late or missing mortgage payment is only going to impact one of these categories. Unfortunately, this also happens to be the largest factor, making up more than a third of the total credit score. 

A Late Mortgage Payment

First, it is important for everyone to know that a late payment is not going to impact someone’s credit score until it is late by more than a month. At the same time, people need to remember that the lender can still access a late fee. If someone has a high credit score with a long credit history, this late payment is not going to hurt as much. On the other hand, someone with a poor credit score and a short credit history might feel the sting a little bit more. 

Furthermore, it is important for people to note that a payment that is late by 60 or 90 days is going to hurt someone much more than a payment that is late by just one month. Therefore, even if a payment is going to be late, people should still try to pay it as early as possible.

Protect The Credit Score

It is important for everyone to try to do everything they can to protect their credit score. If they are worried they are not going to be able to make a mortgage payment, they should let the lender know and see what their options are.