HOMEBUYERS:

Improve your Credit Score to qualify

in 90 days or less!

·          Get more credit cards.   As crazy as this may sound, the best and fastest way to improve your credit score is to obtain two or three low-limit credit cards and use them.  If you currently have fewer than 5 credit cards, add two or three more to bring your total number of cards up to 5. (Having more than 5 credit cards can start to have a negative effect on your scores, depending on how much of your available credit you are using). In order to help your scores, the new credit card(s) must have a minimum credit limit of $300 and you must put at least a $20 charge on the new card.  In the short-term, applying for new credit will temporarily lower your credit scores, however I have seen scores jump up significantly after making just one or two on-time payments on the new credit cards.

There are good companies to start establishing positive credit with via credit card, even if your credit needs improvement:

The New Horizon websites have links to various banks that are very likely to approve you for a credit card, even with poor credit. This is an excellent way to start establishing your positive credit: the cards offered below report to All 3 Credit Bureaus to help you to quickly improve your scores!

Secured Cards (Money Down – anyone qualifies)

http://www.newhorizon.org/Info/securedcc.htm

Unsecured Cards (No Money Down)

http://www.newhorizon.org/Info/unsecured.htm

• Watch your balances. The less of your available credit limits that you use, the better. Try not to use more than 30% of your credit card limits at any time during the month; using 10% or less will significantly improve your credit scores.   If you are currently using 50% or more of your available credit, make every possible effort to get your balance below 50% of the credit limit on each credit card.  If any your credit card balances is over 50% of the credit limit, your credit score is negatively impacted-- EVEN IF you make your payment on time.  If you are over the 90% mark the impact to your scores is even more significant. Remember that the credit bureaus and your credit scores don't distinguish between balances you pay off and those you carry month to month; the balance that's reported to the bureaus is typically the one that shows on your most recent monthly statement. If you're in the habit of using a big portion of your credit limits -- because you travel on business or are chasing credit card rewards -- consider contacting your credit card companies and asking for higher credit limits.   For the reasons listed above, avoid consolidating your debt on one or two credit cards, even if the interest rate and payments are lower.
• Size is NOT important.  Keep in mind that from a credit-scoring perspective, whether or not you are big spender on your credit cards is unimportant.  A card with a $500 dollar credit limit and $30 minimum monthly payment has the same weight in your credit score as a $5,000 credit limit card with a $300 minimum monthly payment.  What DOES matter is the PERCENTAGE of your available credit limits that you are using, and making sure that you always make your payments on time or early, regardless or whether your payment is $10 or $1,000.
• Dispute negative items on your credit reports. Your credit score is derived entirely from the information on your credit reports at the three bureaus, and a single serious error can cost you big time. You're entitled to a free annual look at your reports from www.annualcreditreport.com.  HOWEVER, AVOID PULLING YOUR CREDIT THROUGH www.annualcreditreport.com, part of what you agree to when you access a report form this website is to increase the dispute timeframe that creditors must respond to from 30 days to 45 days. In order to dispute erroneous information on your credit reports, you must first purchase a copy of your report online (about $10).  I recommend purchasing your report online from www.equifax.com, as they require that you purchase a report from them in order to dispute.  Print a copy of your report, and then use the reference number that appears in the top right-hand corner of the report to do an online dispute of your negative items at the other two credit bureaus, www.experian.com and www.transunion.com.  Once you have clicked on “online dispute” or “what if there are errors on my credit report?”  the process works like this: each negative item on your credit report will appear with the option to dispute.  You will be asked to select a choice on a pull-down menu that describes why you are disputing the item (for example, “never paid late” “not my account” etc.)  There is a box asking for you to type a detailed explanation of why you think the negative credit item is erroneous, however you DO NOT have to enter any additional information.  Once you have submitted your disputed items online to the credit bureau, the bureau will send a request to each creditor asking them to provide more information about the disputed item.  The creditor has 30 days to respond to the credit bureau inquiry.  If the creditor does not respond in time, the negative item will be removed from your credit, EVEN IF the negative reporting is accurate.  Generally, it takes about 45-60 days from the day you dispute your credit with all 3 credit bureaus to make a positive impact on your credit score.  If you are planning to purchase a home, it is best to wait until your score increases enough to qualify before making an offer.  Please contact me for more information on this subject.

• Don't be late. Skipping a single payment can knock your score down overnight. Make sure all your bills are paid on time. Consider setting up automatic or recurring payments for all your credit accounts.

• Don't close accounts. Closing accounts, even an account with a $0 balance can never help your credit score and may hurt it. The credit scoring formula wants to see evidence that you are actively and responsibly using credit. So you get more points for having open accounts in good standing; conversely, having a higher proportion of closed accounts can hurt you more.

• Keep your accounts active. In the past, the biggest risk from letting accounts be inactive is that your lenders might close them, thus dinging your scores. Now simply having too many inactive, or $0 balance accounts could count against you in some circumstances. Once again, the credit scoring formula is looking for evidence you can responsibly manage credit. Consider keeping your oldest and highest-limit cards active by charging a minimum of $20 on each one per month.
• Don’t pay off collections or charge-offs.  At least in the short term, paying off collections or charge-offs will immediately lower your credit score.  If you must pay off old collection accounts, do it through escrow when you close your mortgage loan.  During the process of improving your credit scores, put your money to better use by paying down high credit card balances, instead of paying off collections. 
• Ask your current credit cards to increase your credit limit.  One of the fastest ways to drive down the percentage of your credit limit that you are using is to call your credit card companies and ask them to increase your credit limit.  This is one way to get your percentage of credit limit use under 50% without having to pay down the card.
• Beware “pre-paid” credit cards.  I recently visited www.creditcards.com to have a closer look at the different types of pre-paid credit cards.  Many of them claim to build your credit, however these cards report payment history to a new alternative credit reporting organization called PRBC.  To the best of my knowledge, PRBC is not currently being used or accepted for credit decisions made by mortgage lenders.  So for the time being, pre-paid credit cards do not report payment history to the three established credit bureaus and are not a good option for improving your credit score.

• Piggyback the right way. Being an “authorized user” on a credit card will not help your score.  However, you still can benefit from someone else's good credit by being added as a joint account holder to a credit card. In most cases, the other person's history with the card will be added to your credit reports; as long as the account remains in good standing, it can help your scores. But being added as a joint account holder involves more risk: You're now jointly responsible for the debt, whereas an authorized user typically would not be. Getting taken off the account isn't easy, either. A phone call from the primary cardholder might remove the name of an authorized user, but you often can't be removed from a joint account until it's closed.
• Ask your current credit cards to increase your credit limit.  One of the fastest ways to drive down the percentage of your credit limit that you are using is to call your credit card companies and ask them to increase your credit limit.  This is one way to get your percentage of credit limit use under 50% without having to pay down the card.

• Consider an installment loan. There are two main types of credit: revolving accounts that allow you to build up and pay down balances, and installment loans that typically have fixed payments that require you to pay down your balance over time. Credit cards and lines of credit are examples of revolving accounts, while auto loans and mortgages are considered installment loans. The credit scoring formula has always rewarded folks who had and successfully managed both types, which is why getting an installment loan is often recommended as a more long-term way for people with troubled credit to rehabilitate their scores.   However, getting an installment loan for a new car or other major purchase could disqualify you from a mortgage loan by making your debt-to-income ratio too high.  Talk to your mortgage professional first before choosing to make a new major purchase with an installment loan.

YOU REALLY CAN  RAISE YOUR CREDIT SCORE IN 90 DAYS OR LESS IN ORDER TO QUALIFY TO PURCHASE A HOME, USING JUST SOME OF THE SUGGESTIONS LISTED ABOVE! 

PLEASE SCHEDULE AN APPOINTMENT FOR MORE DETAILED INFORMATION AND ASSISTANCE.

TOGETHER, WE CAN MAKE IT HAPPEN FOR YOU!

Sincerely,

Shawn Hurley

Major Mortgage 

CELL # 970-270-8818