How to pump up your credit score
To avoid another real estate bubble, many lenders have tightened their mortgage requirements. According to a report by the Federal Reserve, a majority of banks are less likely to offer loans to people with a FICO score of 620 and a 10 percent down payment than they were in 2006. Lenders were also less likely to do so even for those with a score of 720. The good news though is there are some tactics that consumers can employ to raise their scores.
- First, it is worth noting that median credit scores are rising, as people reduce debt and spend less in tight economic times. Some 18 percent of Americans now have scores of 800 to 850, while 15 percent are below 550, according to FICO data.
- Often lenders will review FICO scores from the three big credit agencies, and they use the middle number to evaluate the borrower. That number becomes the borrower’s “risk number.”
- Borrowers can figure out their risk number by obtaining their three credit reports, available free once a year at AnnualCreditReport.com, and studying them carefully for errors or omissions.
- According to FICO, the two biggest factors in a credit score are payment history, which accounts for 35 percent of the score, and the amounts owed, accounting for 30 percent.
- Knowing that information, one can raise his/her credit score by reducing balances on credit cards. However, if an account is in collection, it is too late to improve the credit score by paying it off. The notation that an account is in collection is what lowers the score, so consumers may get more mileage by paying down active credit-card balances and other debts first.
- Though mistakes and bankruptcies may stay on a credit report for seven years, lenders will generally be more likely to overlook late payments that happened two or more years ago than more recent ones.
- Improving one’s credit score could take three to four months, or it could take as long as 18 months
There is one company I would like to recommend which has a great track record and is rated “A” with the Better Business Bureau. This is Blue Water Credit in Roseville, Ca, 916.315.9190. Please ask for the owner, Jeff Sipes and tell him you got his name from me and ask him about the free credit consultation, a $149 value.
Thank you for reading this post. If I can ever be of help in finding you the perfect property here in the Napa Valley, please email me at Curtis@NapaValleyAddress.com
Your Napa Valley Broker Extraordinaire, selling Real Estate here from its heart, Yountville
My website & blog: www.NapaValleyAddress.com