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Credit Score Tips
Compliments of:
Mortgage Broker, Minocqua, WI
Integrity Financial Services-Lakeland 
30 years experience working for you

A "Must Read", Your money depends on it!

FREE Report from: Integrity Financial Services-Lakeland, Minocqua Mortgage Brokers.
When you drag around a LESS THAN PERFECT credit score, you will PAY MORE for car loans, insurance, credit cards and mortgages. 
Learn the Rules and WIN the Credit Score Game!

1) Pay down your credit cards. Paying off your credit cards will have a dramatic effect on your credit scores. As well, paying down installment loans (mortgage, auto, student, etc.) can help your score.

The credit scoring formulas like to see a big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card will really help.

To play the credit score numbers game the way the formulas are written, the best strategy is to pay down the cards that are closest to their limits. Instead of paying off the highest interest card first, get all balances within the 30% margin to raise scores fast.

2) Dispute old negatives. Remember that fight with your Satellite TV company over an unfair bill that resulted in a collections account, well, you can try disputing the account with the credit bureaus as "not mine." The older and smaller a collection account the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute.

Some customers have had luck disputing old items with a lender that has merged with another company, mergers can leave lender records a real mess and your derogatory item unverifiable.

3) Dust off your old cards. The older your credit history the better but if you stop using your oldest cards, the issuers may stop updating those accounts with the credit bureaus.
The accounts will still appear, but they won't be given as much weight in the credit scoring formula, said an executive at Fair Isaac & Co., one of the leading credit scorers. Even more destructive, in today's market credit card companies are closing those unused accounts. If your oldest account is closed it will decrease your score!

That's why we recommend you use your oldest cards every few months to charge a small amount, paying it off in full when the statement arrives and then do the same with any other inactive account.

4) Use your credit cards lightly. Charging up high balances can hurt your score even if you pay your bill in full each month.

Balances reported to the credit bureaus and thus calculated into your score, is the balance reported on your last statement. (That doesn't mean paying off your balances each month isn't financially smart, it is, just that the credit scoring formulas don't care.) However, for those that bank online, consider paying your bill before the last day of the statement period - thus credit bureaus see a low or zero balance.

Typically, you can increase your score by limiting your charges to 30% or less of a card's limit. If you're having trouble keeping track, consider using a check register to track your spending, logging into your account frequently at the issuer's Web site or using personal finance software like Quicken or several others offered online - many are free, which can download your transactions and balances automatically. 

5) Blitz significant errors. Your credit score is calculated based on the information in your credit report so certain errors can really reduce your score. However, not everything that's reported matters to your score.

Here's the stuff that's usually worth the time and effort of correcting with the bureaus: 

  • Late payments, charge-offs, collections or other negative items that aren't yours.
  • Credit limits reported as lower than they actually are.
  • Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full.
  • Accounts that are still listed as unpaid that were paid or included in a bankruptcy.
  • Negative items older than seven years (10 if in bankruptcy) that should have automatically fallen off your report.

      You actually have to be a bit careful with this last one because sometimes scores actually go down when bad items fall off your report. It's a quirk in the credit scoring software and the potential effect of eliminating old negative items is difficult to predict in advance. I call it my "sleeping dog" syndrome, sometimes it's just not worth it to wake him.

      Some of the stuff that you typically shouldn't worry about includes:

    • Various misspellings of your name, oundated or incorrect address information, old employers listed as current, mout inquiries, accounts closed by you still listed as open and accounts closed by you that don't say "closed by consumer".

    If the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else's, that should be obvious when you look at your accounts. You'll see delinquencies or accounts that aren't yours and should be reported immediately. However, if it's just a goof by the credit bureau or one of the companies reporting to it, don't sweat about  it.


    6) Check your credit card limits. Your score might be lower if your lender is reporting a lower limit than you actually have. Most credit card issuers will quickly update this information when you ask.

    If your credit card company has a policy not to report consumers' limits as is the usual case with American Express and Capital One, the bureaus typically use your highest balance as a kind of proxy for your credit limit. 

    Here's the problem: If you consistently charge the same amount each month, say $2,000 to $2,500, it may look to the credit scoring formula like you're regularly maxing out that card.

    You could go on a spending spree to raise the limit, but a safer solution would  be to pay your balance down or off before your statement period closes. Check your last statement to see which day of the month that typically is, then go to the issuer's Web site about a week in advance of the statement closing date and pay off what you owe. It won't raise your reported limit, but it will widen the gap between that limit and your closing balance, and should raise your score. Refer back to #4 for more details.

     7) Ask for a little goodwill. If you've been a good customer, a lender may agree to simply erase one late payment from your credit history. You usually have to make the request in writing, but I have accomplished this with just a phone call. Your chances for a "goodwill adjustment" improve the better your record with the company and the better your credit in general. But it doesn't hurt to ask - thereby keeping your record in good standings.

    A longer term solution for more troubled accounts is to ask that they be "re-aged." If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or more on-time payments.

    8) Closing accounts won't help your score, and may hurt it.

    If your goal is boosting your score, leave these alone. You want to show "depth of file" by keeping accounts for many years. However, once an account has been closed, though, it doesn't matter to the scoring formulas who did it, you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

    BONUS: Other actions to beware when you're trying to improve your score:

    Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it -- but don't do so without being asked.

    • Making a late payment. The irony here is that a late or missed payment will hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you've already got a string of negative items on your credit report, one more won't have a big impact, but it's still something you want to avoid if you're trying to improve your score.
    • Consolidating your accounts. Applying for a new account can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. Ironically, it's better to have smaller balances on (30% or less) a few cards than a big balance on one.
    • Applying for new credit if you've already got plenty. On the other hand, applying for and getting an installment loan can help your score if you don't have any installment accounts, or you're trying to recover from a credit disaster like bankruptcy.

    SMALL BUSINESS BONUS: I am only aware of two credit cards that will not report to the credit reporting agencies at all. Small business owners may wish to open a business card with American Express or US Bank instead of becoming a corporation in order to separate business debt from personal debt. Meaning, your personal debt will generate your credit scores and the business debt will not be reported and included in the credit agency formula for scoring.

    So, if you have poor or mediocre scores to begin with, these tips can be a boon to your credit scores. However, once you've hit the 700 mark, any tweaking you do will tend to have less of an impact, but each increase helps since mortgage lenders best interest rates require a 740 score or better.

    And if your scores are in the "excellent" category, say 760 or above, you'll probably only be able to eke out a few extra points despite your best efforts. That's not a problem since you're already qualified for the best rates and terms.

    Get the only truly free credit report from www.annualcreditreport.com. I suggest you get a report every four months, pulling from one of the three agencies at a time. This allows you to monitor your credit reports, monitoring is the best way to pro-active identity theft detection.

    Their money depends on it too!
     Call Marcia Waldburger, I want to be your first choice Minocqua Mortgage Broker .

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