Sprucing Up Your Credit Scores
by Credit.com
Your credit scores from Equifax, Experian and TransUnion play a major role in determining
your mortgage rates. Start working on your credit scores 3 to 6 months before you
plan to buy a home.
Estimate your current score
Each person’s credit score is unique to his or her own situation, so it’s
hard to say exactly what will help you boost your score. To get personalized tips
for improvement, use our quick credit score estimator to see where you stand first.
This free estimator includes specific tips for how you may be able to improve your
score.
Check your credit reports
Since your mortgage lender may check your Equifax, Experian,
and TransUnion credit reports for your application, it’s important that you
check all three too. Order
all three of your credit reports and FICO scores online. Review each credit
report closely for possible signs of identity theft or inaccuracies. Highlight anything
that you suspect may be hurting your credit score or may be inaccurate.
Develop a plan
Using your credit reports and the information from your credit score estimation,
you may want to make some updates or dispute some errors with the credit bureaus.
Here are some things that can and cannot help your score:
Can boost your credit score:
- Reducing your credit card balances
- Paying off small loans
- Paying all your credit cards and loans on time each month
- Avoiding unnecessary inquiries for new credit
- Asking a creditor to increase your credit limit
- Removing expired negative records (collections, bankruptcy) from your credit
reports
- Removing negative fraudulent records (identity theft records) from your credit
reports
Cannot boost your credit score:
- Closing credit card or loan accounts (this will actually lower your credit
score)
- Attempting to remove accurate records from your credit reports
- Removing positive expired records from your credit reports
- Applying for a lot of new accounts
- Making late payments on any account
- Paying off collection accounts
- Paying off bankruptcy accounts
Requesting changes
Once you have pinpointed exactly what you need to do to boost
your credit score, you should take action to make the changes. If you want to remove
something inaccurate from your credit reports, submit a letter
of dispute to the credit bureau. If you want to remove something fraudulent
from your credit reports, report
the crime to the credit bureau’s identity theft departments.
Watch and wait
Most updates take 30 to 60 days to appear on your credit reports.
During this period, you should watch your credit reports and credit scores closely.
A service like Score
Watch or Unlimited Credit Monitoring
allows you to track improvements and check your credit scores as often as you would
like. When your changes have taken place and your credit scores have increased,
you should start the loan application process.
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