Mortgage Resources

Raising Credit Scores

Whenever you apply for a loan, a copy of your credit report from the credit reporting agencies is required. The information that is contained in your credit report will determine your credit score. If an investor such as credit card companies and banks making a car or home loans don't like your credit score, they may not trust you enough to loan you money. On the other hand, they may view you as a high risk and loan you money with very higher interest rates and lower credit limits than they would if you were a low-risk borrower.

If you have been denied credit or have been charged unusually high interest rates, it may be because you have a low credit score. You could have a low credit score for several reasons. Credit reporting agencies are required to follow certain procedures to ensure that subscribing creditors report accurate information about your payment history. However, mistakes often occur. Thus, your credit score may be low because there are inaccuracies in your credit report. You can begin the process of raising credit score? by having any inaccuracies removed from your credit report. You have the right to dispute any inaccuracies in your credit report. However, the dispute must be in writing.

Another reason why you may have a low credit score is because you have outstanding credit. Outstanding credit includes the number of balances recently reported, the average balances, and the relationship between the total balances and total credit limits on revolving trade lines. You will receive a lower credit score if the balances are to close to their limits. You can begin the process of raising credit score? by paying your balances significantly below their credit limits. Also, you should aim to pay off as many bills as you possibly can.

Also, you may have a low credit score because you do not pay your bills on time. Your payment history carries the most weight on your credit score. You can reestablish good credit as well as raise your credit score by paying your bills on time. Your credit score may also be low because you are frequently in pursuit of opening up new accounts. Much attention is given to the number of inquiries and new account openings in the last year. Recent inquiries are weighed heavily against you. Frequent inquiries will significantly lower your credit score. You can begin the process of raising credit score by avoiding frequent inquiries.

Your Score Effects Your Rates

You may have a low credit score because of the type of credit that you have. If you have a large number of credit lines for credit such as bankcards, travel and entertainment cards, department store cards, personal finance company loans, and installment loans, you will invariably have a lower credit score. You can begin the process of raising credit score? by reducing your bank card numbers to between two and four. If you are serious about raising your credit score, you should make an effort to pay off as many loans that you have with personal finance companies. Personal finance companies are known to charge extremely high interest rates.

Once you have made an effort to begin the process of raising credit score, you should wait at least four to six weeks before applying for a loan. It takes about 4 to 6 weeks for creditors to update your credit files. After your credit files have been updated, you should have your loan officer run another credit report to see the results.

You should check your credit report at least once a year (preferably every six months) to make sure it does not contain any inaccuracies that will inhibit raising credit score. You may be denied credit or charged excessively high interest rates due to erroneous information contained in your credit report.

Every borrower situation is unique and I would be happy to discuss with you what you can do to raise your credit score in more detail to obtain a home loan.



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