Docstoc

How to Raise Your Credit Score 100 Points In 45 Days

Document Sample
How to Raise Your Credit Score 100 Points In 45 Days Powered By Docstoc
					      RAISE YOUR CREDIT SCORE
              50 POINTS
         IN FORTY-FIVE DAYS
Bruce Gustafson
(303) 596-0780
bruceggustafson@msn.com
Crestline/Universal Lending
What Is Your FICO Credit Score?

• Forecast of how well you will repay a
  loan as agreed during the next 24
  months – the higher the score, the
  better the forecast that you will repay
• Snapshot of your credit history at a
  particular point in time
• Only includes factors related to an
  individual’s credit
• Always changing
Who uses credit scores and reports?


•   Financial institutions
•   Retail stores
•   Utility companies
•   Landlords
•   Insurance companies
•   Employers
Frequently Asked Questions
• How long does bankruptcy filing stay on credit report?
  10 years
• Will my credit be affected while I “shop for rates”?
  No, as long as your inquiries are for specific loan types and
  within 45 days.
• Will my score drop if I apply for new credit?
  If it does, not much. If you’re applying for a mortgage loan
  for a short period of time (45 days) then these requests are
  treated as a single inquiry
• Does my score determine whether or not I get credit?
  No, because most lenders use a number of facts to make
   credit decisions.
Small mistakes that
could mean bigger problems

• Personal identification information is
     incorrect
• Employment history includes a company
     where you never worked
• Accounts are listed more than once
• There is a hard inquiry from a company
     you did not submit an application to
• An account is missing
  Other Common Misconceptions
• Balance transfers don’t hurt score
• Credit history contains only current account
  status
• Delinquent accounts now made current have
  no negative impact on score
• Bankruptcy “clears” both debt and credit
  record
• Divorce decrees regarding joint accounts
  must be honored by creditors
• Student loans not in repayment are not
  counted as debt
 Fico Score – Mortgage Payment
 $400,000 Home Loan
Fico Score   APR Monthly   Payment   Extra Interest Paid
760-850       4.397%       $2,002
700-759       4.619%       $2,055      $19,080
680-699       4.796%       $2,098      $34,560
660-679       5.010%       $2,150      $53,280
640-659       5.440%       $2,256       $91,440
620-639       5.986%       $2,395      $141,480
WHAT MAKES UP A CREDIT
SCORE?
• Payment History    35%

• Balances Carried   30%

• Credit History     15%

• Mix Of Accounts    10%

• Inquiries          10%
PAYMENT HISTORY – 35%

• Bills Paid As Agreed

• Most Recent 6 Months

• Highest Weight On Highest Pay History
  – Mortgage
  – Biggest Payment
BALANCES CARRIED – 30%
•   Keep Balances As Low As Possible

•   Outstanding Balance Versus Available Credit Affects Credit Score

         For example:
         Credit Card       Balance          Available Credit
         Visa              $10,000          $10,000
         Visa              $0               $10,000

•   Leave Credit Card Balance As Is = Lower Credit Score

•   Spread Balance Between Cards ($5,000 each) = Higher Credit
    Score

•   Mortgage / Installment Less Of Factor
CREDIT HISTORY – 15%

• Longer Credit History = Higher Credit
  Score

• Long Credit History Paid As Agreed /
  Positive Impact To Credit Score

• Never Close Credit Accounts - Especially
  If Long History – Or Negative Impact To
  Credit Score
MIX OF ACCOUNTS – 10%

• Ideal To Have Installment & Revolving Accounts

• Mortgage Loan

• Auto Loan

• 3 - 5 Credit Cards (More is OK too)

• HELOC Should Be Greater Than $40K Or Will
  Report As Revolving Account Versus Mortgage
INQUIRIES - 10%
• Shopping Around?
    Pull Multiple Reports For Mortgage and Auto
    1 Inquiry Within 45 days (for each)


• Each Inquiry Averages 5 Points

• Only First 10 Inquiries Count Each Year

• After 10, Will Not Affect Credit Score
INQUIRIES THAT DO NOT HURT
THE SCORE
• Job Related

• Insurance / Utilities

• Account Review

• Personal (www.annualcreditreport.com)
  and obtain free credit report)

• Promotional (pre-approved offers in the
  mail)
BLEMISHED CREDIT CAN BE
COSTLY
• Low Credit Score = Higher Interest Rate

  – Mortgage Loans

  – Credit Cards

  – Auto Loans

  – Insurance Premiums
STEPS TO TAKE TO INCREASE
CREDIT SCORE 50 POINTS

• Pay Past Due Accounts

• Get Rid Of Late Payments

• Have Credit Limits Increased

• Do Not Close Old Accounts – Keep Active
PAY PAST DUE ACCOUNTS
• Pay All Accounts That Are Past Due

• Past Due Accounts Can = 1 Day Late

• Severely Hurt Credit Score
HAVE LATE PAYMENTS
REMOVED
• Phone Creditor And Request Late
  Payments Be Removed

• Be Persistent – Work Your Way Up The
  Ladder

• Always Get A Letter That Documents:
  – Name / Address / Account Number
  – Specific Late To Be Removed
  – On Company Letterhead / Signed By
    Employee
INCREASE CREDIT LIMITS
• Every Six Months Request An Increase To
  Credit Limit On Credit Accounts

• Have Creditor Base Increase On Credit
  History

• If Creditor Must Pull Credit, Do Not
  Continue; Will Lower Credit Score
DO NOT CLOSE ACCOUNTS

• Keep All Accounts Open

• Use Old Accounts Periodically – Charge
  Small Amount - Pay off Immediately

• Closing Accounts With A Long Credit
  History Will Hurt Credit Score
SUMMARY
• Borrow When You Do Not Need It

• Keep Balance To Limit Ratio Low

• When Creditor Removes Late And Provides
  Letter – Use Credit Rescore

• Never Payoff A Collection / Judgment When
  Applying For A Mortgage Loan

• Ensure that creditors reports the credit limit.
  When a credit limit is not reported it may look like
  the card is maxed out when it is not.
SUMMARY
• Get (or keep) the good stuff going
• Build NEW good credit versus dwelling on old
  bad credit. New on-time payments improve
  your credit more quickly than paying off old
  debt
• Do not apply for new credit cards to replace
  old cards. Keep revolving accounts open – to
  lengthen a credit history and keep total credit
  limit higher than outstanding debt.
• Increasing Credit Score By 10 Points =
  Interest Savings of $100,000 Over 30 Years
  ($500K Mortgage Loan)

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:3
posted:5/16/2012
language:
pages:23
fanzhongqing fanzhongqing http://
About