Credit Repair

Improving Your Credit Score

Your credit score directly affects the interest rate you will qualify for when applying for a mortgage. Your score tells the lender how likely you are to default on a loan. The lower your credit Score, the higher the interest you will pay on your mortgage. The reason for this is the lender has to take on more risk to lend you money based on your payment history.

Tip # 1 Bills:

Pay all of your bills on time. Late payments (payments that are 30 days late or more) will have a negative effect on your credit score. At the very least, make sure you are paying something toward each bill every month to avoid going into collections.

Tip # 2 Credit Cards:

When your credit is being repaired you shouldn’t cut up your credit cards. If your credit is bad, you may not be able to gain additional credit cards later. Be selective about the ones you keep, and it’s not enough to just stop using the additional cards, you need to write to your creditors to request that they close your accounts. A great way to re-establish your credit is to get a secured credit card. You will have to keep a designated amount of money in an account that will be sufficient to cover your charges. Make sure that your payments arrive on time.

Tip # 3 Limits:

It is important to keep the balance on your credit cards much lower than their maximum limit. Your amount of available credit is taken into strong consideration by a lender you are hoping to get a loan with. If you keep your credit card balances near the maximum limit, it indicates to the lender that you are a high risk, which will affect the interest rate you are approved for. So make sure you manage your credit card balances and keep them in far distance from the maximum limits.

Tip # 4 Bankruptcy and Tax Liens:

Avoid both at all costs. A bankruptcy stays on your credit report for up to 10 years. Collection accounts and paid tax liens stay on for seven years, and unpaid tax liens will never go away. Having either of these on your credit report will affect the loan you are approved for.

Tip # 5 Check It Regularly:

Sign up for a credit reporting service. These are scattered all over the internet for very little cost. Check it at least monthly to make sure there is nothing irregular going on that can affect your score.