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3 Quick Tips to Improve Your Fico Credit Score

Thu, 15 Apr 2010 08:26:42 +0000

Just like you would manage your money and maintain a budget you must manage your credit score. These quick tips will help you improve your fico score and keep it high. This of course allows you to qualify for the lowest interest rates for home mortgages, car loans, credit cards and all types of financing.

Tip 1 Pay Your Bills on Time.

Ok, I should not say that one because we all know the most important thing we can do to manage our fico credit score is to pay your bills on time. The reason many people have a hard time doing this is that they are not organized and do not manage their bills. Many people borrow too much and have over utilized credit. So to be in control first make a budget and live within your means. Then pay your bills on time.

Tip 2 Lower Your Debt.

Your Fico Credit score is based on a number of factors and the second most important factor is how much you owe as a percentage of your maximum line of credit. This is important for both individual accounts and the total of all accounts. To receive the maximum points for your open revolving credit you should have a minimum balance of less than 20% of the maximum line of credit. If you have less than 50% you get positive points but you begin to lose points the higher your balance is. If you owe more the the credit limit there is a stiff penalty in your credit score. Avoid this at all costs. If you look at your credit your lines of credit and you have a low balance as a whole that helps but if some are low and others are high maybe a balance transfer to keep all balances low would be helpful if you can not pay them down. This tip is to lower your debt. Do not pay it off. Keep a small balance and use them regularly, even if you pay them within 30 days. This activity improves your credit score. To have accounts that are open with no balances actually can lower your score. The positive points for having a credit card open for a long period of time and having low balances go out of the window when the card is inactive and has a zero balance. The zero balance means that the card is not counted as it is treated as inactive.

Tip 3 Check Your Credit Regularly.

There are lots of reasons to check your credit regularly. You must check for inaccuracies that you can quickly dispute. These inaccuracies can cause your score to be lowered. You can check for identity theft, which is one of the fastest growing crimes today. You can check to make sure you are properly managing your credit and to improve your Fico credit score. Checking your credit regularly can save you hundreds of dollars or more each month. Checking regularly can save you years of frustration if you are a victim of Identity Theft. Checking regularly is well worth the $10.00 per month some credit monitoring services charge.

So pay your bills on time, lower your debt and check your credit regularly. These three tips can help dramatically improve your fico credit score and allow you to get the best credit and the lowest interest rates.

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Avoid Lowering Your Fico Credit Score with a Loan Modification

Sat, 27 Mar 2010 23:56:19 +0000

Perfect Payment History – Low Fico Credit Score.

Yesterday I talked to a customer who had a 740 fico rating. I knew this customer because I had worked with her in the past. This woman was very meticulous and she worked hard to manage her debt and keep her rating high. I believe what happened to her could happen to many people who do not know how their fico scores are calculated. She attempted to reduce her debt and she applied for a loan modification. She contacted her lender, requested information and based upon a preliminary conversation the lender agreed that she could have her loan modified and save just under $100 per month. In an effort to reduce her total debt she also planned to pay off her revolving cards. So she closed all of her revolving accounts and began to pay down her debt. This all happened within a 30 day period. By the time she got her papers she read that her financial rating would be affected by the loan modification and decided not to do that. Instead she contacted us to apply for a streamline refinance. We could save $140 per month (more the the loan modification) so she began the process and was quickly denied. Her fico had gone from 740 to 583 and she never missed a payment.

The Loan Modification Destroys Your Fico.

When she received a copy of her credit report it read that the customer was paying less than agreed upon payments. So even though she was not late and really never accepted the modification her credit score was impacted. This was corrected by her mortgage company and they sent her a letter that they would also sent to the credit bureaus only because she cancelled the modification and never made a lower payment. But for everyone else considering a loan modification I would also look at the streamline refinance. This may offer you similar savings without negatively affecting your fico scores.

Canceling Her Accounts Lowered Her Credit Score.

There are a few reasons this lowered her score. The main reason is by canceling all of her accounts but one she no longer had available credit and was considered by the financial scoring model as being maxed out. The closer you are to your maximum limit the lower your score is. The highest points are given to the client who has less than 20% balance on their cards. If they have more than 50% balance then the scoring model lowers points from your rating. Another means of positive points are the length of time accounts have been open and active. These points go away when you close your accounts.

Reduce Your Debt and Keep Your Fico Credit Score High.

In this case our client would have had a higher financial rating if she methodically paid down her accounts without closing them. In fact her rating would have gone up.

Regarding the Loan Modification she did the right thing by comparing the streamline refinance to the modification. If they are close choose to refinance verse modify and you can save your credit rating. But, in some cases the loan modification can be far more beneficial even with the lower financial rating. This is only temporary and it may take a a while to build your rating but the savings may be worth it.

Monitor Your Credit Report.

If she was not denied a loan this customer would have never known the misinformation reported by her mortgage company. It is important to monitor the information reported to the bureaus to make sure your information is accurate and that creditors are not making a mistake so you qualify for the best credit and get the lowest interest rates.

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Strategies to Improve Your Fico Credit Score

Wed, 03 Mar 2010 12:09:12 +0000

Improve Your Fico Credit Scores.

To get the best credit and interest rates you must have the best fico credit scores. These strategies will help you improve your fico credit scores and qualify for the best mortgage rates, auto loan rates and credit cards. Implement these to improve your credit score today.

Legal Credit Repair.

You have the right to legal credit repair. Whether you do it yourself or hire a professional company to assist you to remove items off of your report that are either inaccurate, improperly reporting or just do not meet the legal standards required for the credit reporting agencies to follow in reporting your credit history. So the number one strategy that many people use to improve their credit scores is to dispute those items. It is an effective method especially if the you stick to it. Unfortunately, the credit reporting agencies are not eager to help you. In some cases they have been known to arbitrarily dismiss many consumers disputes as frivolous and unfounded. This deters a lot of people. It has been said that as much as 20% of all disputes submitted to the credit reporting agencies are dismissed as frivolous. That means 80% are reviewed and worked on. Chances are if you dispute the inaccuracies one or 2 more rounds that they will be properly reviewed and handled.

Reduce Your Balances and or Increase Your Credit Limits.

A second strategy almost as effective as disputing negative items on your credit report is to reduce the balances on your credit cards and or increase your limits. The balanced owed on a credit card as a percentage of the high credit limit affects your credit score. They higher that ratio the lower your score. The lower the ratio the higher the score. This factor alone can account for one client who pays his bills on time every month with a credit score of 750 while another client who also pays their bills on time every month only has a 600 score. A 750 is considered very good credit while a 600 score is fair and the consumer would not qualify for most credit programs. If they do qualify they would pay a higher costs. On time payments account for 35% of your credit score. The available credit percentage factor represents 30% of your credit score. These two strategies alone can account for 65% of your total score.

Negotiate Old Collections and Late Payments.

The older negative items are on your report the less impact they have on your credit score. To improve your fico credit score you want to remove them completely from the report. If you pay them off or make payment arrangements you create a new activity that make the negative item a recent activity therefore effectively lowering or worsening your score. This is the exact opposite of what your intentions may be. To improve your score negotiate with the creditor to pay the item off at a reduced amount and for that they must complete remove the item from the credit bureau. You must get this in writing before you send them the money. Otherwise they have no incentive to follow through and remove the item.

Finally Strategies.

These three strategies will help you improve your credit score and allow you to qualify for the best credit at the lowest interest rates. Other strategies to remember is time. The longer an account is open the more positive points you add to your credit score. The type of accounts you have also affect your score. Mortgages and installment loans have the highest value, then major bank credit followed by national department store accounts. All other accounts, though they affect your credit score they have less of a positive impact. Use these strategies to improve your credit, get a mortgage, credit card or auto loan.

Louis J.

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