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Managing from the ground up: Argent prez says brokers are the oxygen of the mortgage ecosystem

National Mortgage Professional
Mar 28, 2006

Quick fixes to help increase your client's credit scoreSherene Costanzocredit scoring, fixing credit In the mortgage industry, it is quite clear that a low credit score can cost your client extra money, especially when it comes to mortgage interest rates. More than 75 percent of Americans have credit scores below 640 and could use a quick boost. Your client may be able to obtain a loan with an average credit score, although they would not mind having a better credit score in order to save money on mortgages, car loans and credit card rates. Some clients' scores are too low to even be approved. When a client is caught in this type of situation, there are options available to them. With a few quick pointers, your clients can quickly boost their credit scores to qualify for that loan of preference. The fastest and easiest way to quickly fix a low score is to use the following tips or contact a credit restoration company to assist them with the process. Understanding your credit and credit score The first step for your client is to understand what a credit score is. Consumers are entitled to one free credit report from all three major credit bureaus at least once a year. However, this free report does not include the consumer's credit score. All three credit bureaus offer this score for a small fee. The credit scores range from about 300-850. Anything below 700 could use a boost. Trying a few of the following tips may help your clients with a quick score boost! You may also want to refer your clients to a credit restoration company to assist them with their score improvement and credit education. Many of these companies can provide this service for an extremely low fee and can save them the time and aggravation of trying to improve their credit score on their own. In turn, you will be able to finance them once their score is improved, which sure beats tossing them into your dead files! Maybe you will gain a few extra loans just by referring them to a reputable credit restoration company and pointing them in the right direction towards improving their credit score. Lower credit card balances It is very important to keep low balances on your credit cards or revolving account balances. The general rule is to stay below 40 percent of your credit limits. For example, if you have a $10,000 credit limit, it is best to keep your average balance below $4,000. You may even want to request a credit limit increase rather than paying down the balance, but only take that route if you are extremely disciplined about keeping your balance low. Also remember that even if you are paying your balance in full every month, your credit card company still reports your balance as of your closing date. To avoid this high balance being reported, you may want to pay your balance before the statement closing date. In addition, pay down balances on credit cards before installment loans. It may also help to pay down your installment loans, such as mortgages, auto loans, and student loans, though paying down your revolving accounts will have a more significant impact on your credit score. However, let's not forget the importance of being on time with your monthly payments for all of your accounts! Using old cards will show more credit history Credit history plays a major role when it comes to the credit score. Be sure to keep at least one of your oldest credit cards open and in use. When credit cards are not being used, your creditor probably will not report the account to the credit bureaus any longer. When you do use the account, they will send an update to the credit bureaus, which will give the older account more weight toward your credit score. Ask your creditors for a courtesy removal of delinquencies If you have a decent credit history and are a good customer, it does not hurt to ask your creditors for a courtesy adjustment to your account. Whether you had a period of time that was rough or just one delinquency, your creditor may be willing to remove it from your account. Removing these delinquencies will almost definitely improve your credit score. This is most successful if done in writing and you must get the response in writing as well. This way, you may forward your response to the credit bureaus, in order for them to correct your credit report. Many credit restoration companies can assist you with this technique. Challenge your old negative accounts Under the Fair Credit Reporting Act, every consumer has the right to challenge any information on their credit report. If the accounts are not verified by the creditor within 30 days, the account must be removed from the credit report. This process can significantly improve your credit score. It also works great for older accounts. You may want to consider using a credit restoration company to do this process as well. Correct any errors that affect the credit score Some errors that show credit behaviors and responsibility, such as a late payment, will affect the credit score. Errors that do not show credit behaviors, such as name spelling, addresses and employers, will not affect the score. You can find which errors impact your score by researching the credit bureaus' Web sites or through a credit restoration service. Sherene Costanzo is vice president of Credit Consultants Inc. She may be reached at (888) 522-7007 or e-mail sherene@credit-consultants.net.
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