This article is part four in our five part weekly series, Everything You Need to Know About Your Credit Score and How It Affects Your Home Loan provides you with the tools and education you need so that you can make an informed decision on your home loan needs.
Your credit report and credit score play a large role in the loan programs for which you qualify and the corresponding interest rate you receive. This series of articles will help you understand your credit…a well-known, yet mysterious topic and provide you with tools as well as solutions you need to move forward now or chart your course for a future home purchase.
Tips to Increase Your Credit Score Quickly
- Pay down your credit card balances
Your credit utilization ratio is the percentage of credit you are using on your credit card accounts. They account for 30% of your credit score.
- Pay for Delete
Collections on your credit report have a significant negative impact on your credit score. You can directly contact the collection agencies and ask them if they will do a “pay for delete”. A “pay for delete” is an agreement that you agree to pay the balance and in return the creditor agrees to remove the account for your credit report. If a creditor does not agree to remove, there is no reason to pay off collections unless your lender tells you to. Paying collection accounts does not improve your credit score.
- Become an Authorized User
A family member or friend can add you as an authorized user on their credit card. In doing so, the complete credit history of the account will be added to your credit report. FICO does consider authorized user accounts into their credit scoring algorithm. This is a quick way to add up to 30 points to your FICO score.
There is no indication of an additional user added on the primary account holder’s credit report. Thus, simply adding authorized user’s accounts will not have a negative effect on the account of the individual doing you a favor.
- Rapid Rescore
Credit scores rise and fall as information is updated on your credit report. Actions you take today, when working with creditors on your own, can take one or more months to show up in your credit reports. Rapid rescoring allows you to quickly get your credit reports updated and you may see higher scores within a few days.
If you try to dispute a legitimate error on your credit report with the credit bureaus, they have 30 days to investigate the dispute and get back to you with their answer. This is far too long to wait if you are trying to finalize a mortgage loan when there are contractual deadlines that need to be met.
The amount of improvement to your credit scores will vary based on the types of things being corrected, as well as the general state of your credit. Instead, what your mortgage loan originator will do is provide the proof to the credit bureaus that the errors are bogus and have them immediately recalculate your credit score. This can all be done in a matter of a few days.
Disputing erroneous information is not the only way you can increase your score. Your loan originator can run what is called a “what if” simulator. This simulator determines how much your score would improve if you performed a specific action, such as paying off a high balance on one of your credit cards. If your mortgage loan originator sees that your score could improve enough to get you a better loan they could recommend you pay off this card or pay it down below 30% of your credit limit.
Not all lenders offer the rapid rescore option. United Northern Mortgage Bankers, Limited offers our customers the rapid rescore option free of charge.
If your credit is more challenged and needs greater attention, United Northern Mortgage Bankers, Limited has an affiliation with Credit Advisory Group. Credit Advisory Group specializes in credit consultation and repair with the goal of helping individuals suffering from bad credit, whether from a few late payments, charge-offs, child support or even bankruptcies, foreclosures and judgements. Contact one of our licensed mortgage loan originators who can help guide you through the mortgage process and determine the best way to proceed.
UNMB Home Loans Inc. has been trusted for over 39 years to help our customers with their home financing needs. We are happy, at your request, to run your credit report and provide you with a credit analysis free of charge. This and other great benefits are available as part of credit month at UNMB Home Loans Inc.
