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
Understanding your credit and credit
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
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
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
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 [email protected]