How To Increase a Personal Credit Score
Increasing one's personal credit score is a long-term process. Some of the most important steps to a better credit score include:
- Pay bills on time. Late payments and collections can have a serious impact on the FICO score.
- Do not apply for credit frequently. Having a large number of inquiries shown on your credit report can lower the score.
- Reduce credit-card balances. Persons who are "maxed" out will find their score declines.
- Be certain to obtain enough credit to establish a credit history. Not having sufficient credit can negatively impact the score.
Freddie Mac has found that borrowers with credit scores above 660 are likely to repay the mortgage, and underwriters can do a basic review of the file for completeness. For applicants with scores between 620 and 660, the underwriter is required to do a comprehensive review. A very cautious review would be made for persons with credit scores below 620. Most lenders love those with scores above 700 points.
The secrecy surrounding credit scores was or still is inherently anti-consumer. Because a prospective borrower doesn't know his score, he might be charged far in excess of what he might get at another lender. Predatory lending is a term used to describe a lender that takes advantage of ignorant or less sophisticated borrowers to charge unconscionable interest rates and points that are buried in the Good Faith Estimate.
Borrowers should ask for the Good Faith Estimate which will disclose charges to obtain the loan and other miscellaneous amounts such as taxes, etc. . In this endeavor, a real estate licensee with expertise in lending can be very helpful.
NOTE: As of June 1, 2005 a new law has gone into effect in the state of Florida and other states of the Nation by which a consumer can obtain a FREE copy of their credit report from all three reporting bureaus. See >>> reports
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