A credit repairman can be a home buyer’s best friend and saving grace. As professional full-time Realtors on The I Spy Realty Team, we see our clients lean on credit repair all the time. Let’s face it; credit scores can be confusing. It’s a very common (and incorrect!) assumption for clients to think that there is just no way that they will ever be a homeowner due to low/no credit. The first piece of advice that a Realtor should give a client who’s unsure about their financial situation is to reach out to a preferred lender if they don’t already have one. A good lender can easily tell you where you stand with credit and how it can affect your ability to purchase as well as the cost of your monthly payments. If your lender tells you that your credit does need to be improved to be able to buy a home, speak with a credit repair company that has a great reputation. We reached out to our friend, Justin Mirche with Creative Credit Solutions, for some great info about credit repair.
He was kind enough to share a few insights with this guest blog contribution… (Thanks Creative Credit Solutions!)
Ways To Raise Your Credit Score From 500 to 700
A poor credit score can not only be a hurdle, but it can also be damaging to your goals and plans, particularly when applying for a mortgage or buying a new car. FICO credit scores range generally from 300-850. As we’re all aware the higher your score is, the less of a risk you are to lenders and hence the better interest rate you’ll receive.
If your credit score below 620, you’ve probably run into financial difficulties and are ready to get back on track. Late payments, charge-offs and collections all play into low credit scores. However, the good news is, no matter where you are score-wise there are always steps you can take for improvement.
So, what do you do to get started? Let’s take a look at some ways you can begin to move your credit score in your favor.
Understanding How FICO is Determined
35% of your credit score is your payment history, 30% is credit utilization, 15% is length of credit history, 10% is new credit and 10% is credit mix.
With this model in mind, one of the first and most obvious things you can do to help boost your credit score is ensuring you are making all of your payments on time. Setting up automatic payments can really help you accomplish this. Because this is such a major factor of your credit score, you want to do whatever you can not to have any late payments.
Late Payments, Charge-Offs, Collections, Foreclosures, Bankruptcy and Judgements
While there is no quick magical way to get these marks off of your credit profile, the most effective way to start is by contracting Creative Credit Solutions to work on your behalf. The Fair Credit Reporting Act (FCRA) mandates that everything on your credit reports must be 100% accurate, completely verifiable, and timely or it must be deleted.
Keep Your Credit Utilization Ratio Low
When you’re in the rebuilding process with your credit, you want to be sure to take note of your credit utilization ratio. Your ratio is determined by your total credit card balances divided by your total credit limit. Keeping your utilization below 29.99% makes you a more attractive borrower and gives creditors the comfort in knowing that you’re not high risk. Think about it, someone who has lots of money they COULD spend but CHOOSE not to spend is quite obviously lower risk and lower risk = higher credit score!
Length of Credit
This can be a difficult one because you can only have history for as long as you’ve had it and there’s no way for you to extend that time frame. You can however, add yourself as an authorized user to someone else’s seasoned account if you have that option available. The best accounts for consideration are long term ones, with low balances where timely payments have been made.
Another option is to request that an existing long-term utility account under your name that is in good standing begin reporting to on your credit.
Paying Down Existing Debt
This one may seem obvious, but getting your debt paid down is certainly a good move when trying to raise your credit score.
Diversify Your Debt
If all of your credit is coming from store cards, that doesn’t reflect well on your credit report. It’s best that you have a good mix of credit which can include credit cards, installment loans, retail accounts and a mortgage.
Create A Budget…And Stick To It
Although it’s probably not on your top ten list of fun things to do, let’s be honest, more than likely it’s not on your top twenty either, creating a budget is a vital tool in rebuilding your credit. You have to know your numbers so you can plan as you move toward your financial goals. Budgets also help you actively contribute to savings accounts and emergency funds, which assist in not having sudden financial downturns in the future such as repairs and medical expenses.
For more info about Creative Credit Solutions, you can connect with Justin Mirche here: 972-603-6776
Or the Creative Credit Solutions website here: https://www.creativecreditsolutions.net/index.php
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