Lenders have tightened credit standards for making mortgage loans and a visit with your professional mortgage broker can help you to understand the latest changes and requirements.
One requirement that has gained increased emphasis is your credit score. Here are a few tips that can be employed to strengthen your credit score and being able to take advantage of buying opportunities. Here are some strategies experts advise.
1. Check your credit limits. Evenly distribute balances across credit lines.
2. Confirm that your credit report shows the maximum credit limit for each account you may have open. Without this information credit scoring computer software can assume that the account is maxed out. Scoring is better when an account is at 30 percent or below of the maximum amount.
3. Strike a balance. An open credit card with a limited balance and a good payment record raises scores. The credit scoring software is designed to assume that the longer you have had a credit card the less likely the potential for default. Any credit cards should be limited in number and managed carefully.
4. Late payments can remain on your record for anywhere from 7-10 years. If you have late payments and they occurred well in the past try to get them removed. A creditor with whom you have a long relationship may be willing to work with you to adjust your statement. It can take time. Be patient.
5. If you have collection accounts and past due amounts pay them off. The information remains on your record, even after it is cleared. You might ask to see if a collection agency or creditor will remove the negative information. Make the request in writing and be specific as to what you are requesting
6. Charge offs and liens under 24 months can seriously damage your credit because they are more recent. Those older than 24-months, while not welcome, do not have the impact on your credit score.
A free credit report can be obtained annually from the three major credit-reporting agencies, Equifax, Experian and Trans Union. Go online to AnnualCreditReport.com. Each credit report is free. Then take the report(s) to your broker and discuss what it means and any changes that you may want to make.
Thinking of refinancing or purchasing a home and concern about your credit score? Need to consult further with an experienced lender? Contact us, we’d be glad to assist you.
