Tips for Increasing Credit Scores
Do you have past due balances that have been neglected? If they are showing up on your credit report and you want to purchase a home, you need to make sure the balances in question are brought up to current status in all situations possible.
Do you have outstanding debt that you can afford to pay off right now? You should try to get these accounts down to a zero balance, or at least a lower balance. If cash on hand doesn’t allow this, you can try to distribute the debt among other open credit cards. You can also consider opening a new line of credit and transferring part of the balance off a card that is close to being “maxed out.” If you can get the resulting balances below 50% of the available credit, you are on the road to improving their credit score considerably in most cases.
You should not close existing credit card accounts, even if you don’t want to deal with the company any more… Believe it or not, the credit history is a good thing to have!
When married couples keep separate credit card accounts, some or all of the balances can be transferred to one spouse’s list of accounts. This gives the other spouse an opportunity to increase their credit score and designate him or herself as the sole borrower on the mortgage loan. Ownership of the home can remain in both names.
See if your credit providers will increase your available lines of credit. This can, in turn, increase the overall available debt ratio, and increasing your score.
Do you have past dues and charge-offs within the last two years? They should be paid off now, if possible! Past dues older than two years will have little to no impact on credit score if they are paid, but can possibly bring the score down, if they aren’t paid. Focus on that 2-year time frame.
Do you see errors in your report? You should request the credit bureau delete any outstanding debt that is incorrectly charged to them, or things that should have been removed that have been paid. The credit bureau has an obligation to reconcile this within 30 days. If you see items on your report that are less than two years old and you have the money to pay it off now, mark the back of the payment check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, this cancelled check can be used as proof of the transaction in the event the outstanding debt is not removed promptly and interferes with the closing of your loan.
Joel Lobb (NMLS#57916)Senior Loan Officer
Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
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