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Compensating loan officers: Paying minimum wage without spending a dime

Mar 29, 2006

Credit is more important among rising mortgage rates: Better credit = lower ratesSherene CostanzoIncreasing credit scores With mortgage rates on the rise, a credit score is now more important to save your client money on interest rates. Mortgage rates may be beyond your control, but your client can control his credit, which, in turn, can qualify him for lower rates on mortgages. 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, though he might not mind a better credit score to save money on mortgages, car loans and credit cards rates. Some clients' scores are too low to even become approved. When a client is caught in a situation of this sort, there are options for him. Maybe with a few quick pointers, your client can quickly boost his credit score to qualify for that loan of preference and save himself money on interest rates. The fastest and easiest way for your client to make a quick fix is to use some of the following tips or contact a credit restoration company to assist him with the process. Learning about credit and knowing your credit rating The first step for your client to understand is what his credit score is and why. Consumers are entitled to one free credit report from all three major credit bureaus at least once a year. This free report, however, does not include the consumer's credit score. All three credit bureaus offer this score for a few dollars. 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 client to a credit restoration company to assist him with his score improvement and credit education. Many of these companies can provide this service to him for an extremely low fee and can save him a lot of the time and aggravation of trying to improve his credit score on his own. In turn, you will be able to finance him, once his score is improved. It beats tossing him to your dead files! Maybe you will gain a few extra loans just by referring him to a reputable credit restoration company and pointing him in the right direction toward improving his credit score. Keep balances on credit cards below 40 percent of the credit limit The most important accounts to keep low balances on are credit card or revolving account balances. A rule of thumb is to keep the balance 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 pay down the balance, but only take that route if you are extremely disciplined and won't charge the balance any higher. 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. 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 of all of your accounts. 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. Work with creditors to remove delinquencies or negative items 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. Also, keep in mind that when you are settling on collection accounts, you should not pay them unless they give you a promise in writing to remove the negative information from your credit reports. Dispute old negative accounts Under the Fair Credit Reporting Act, consumers have 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 one's credit score. It also works great for older accounts. You may want to consider using a credit restoration company to do this process also. Credit restoration companies can save consumers a lot of the time and aggravation of doing it themselves. Limit your inquiries and remove existing ones Certain inquiries do affect your credit score. Inquiries from any bank or creditor to whom you must give permission to pull your credit report can decrease your credit score. Your score will be decreased especially if there are too many of these inquiries in a short period of time. Be aware of this when shopping for mortgages, cars and when applying for credit cards or credit lines from electronic, furniture or department stores. Also, applying for those credit cards offers you receive in the mail will count as an inquiry. Be aware when your Social Security number is required. This is a sign a bank or creditor is pulling your credit report. You may also dispute inquiries on your report if you feel that they were not authorized. Removing inquiries is definitely a quick way to see a quick increase in the score. Fix any errors that affect the credit score Some errors that show credit behaviors and responsibility, such as late payments, 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. Most errors can be corrected just by sending creditors and credit bureaus the proper documentation to prove the error or correct information. The best way to help your clients is to stress the importance of their credit to them. Educate them on how to keep a good credit rating, along with informing them of how much money it can save them now and in the future. If you'd rather not get into great detail, refer them out to a reputable credit restoration company who can assist them with their credit improvement needs. Your clients will appreciate your concern for their best interests. Sherene Costanzo is vice president of Credit Consultants Inc. She may be reached at (888) 522-7007 or e-mail [email protected].
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