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How to Raise Your Credit Score 100 Points In 45 Days

VIEWS: 3 PAGES: 23

									      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)

								
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