How To Raise Credit Scores

5 Steps To Improve Your FICO Score

Verify your accounts are current

“Payment History” makes the largest impact on your FICO score at 35% of your overall score. It is vital that you keep current on all of the accounts reporting to your credit report. When reviewing your credit report, should you find any accounts that are past due, catch them up as soon as possible and pay at least the minimum payment required by the due date. With 12 months of clean pay history and no late payments, you can dramatically improve your FICO score. And, with 24 months of clean pay history, the improvements can be even bigger. FICO considers the number of accounts paid as agreed as compared to the number of accounts with late payments, along with the severity of those delinquencies. 90-day late payments make a more negative impact than 60-day late payments; and 60-day late payments make a mortgage negative impact than 30-day late payments.

Dispute your inaccuracies

Should you detect any errors on your credit report, you will want to request a correction as quickly as possible. In order to make a correction, use the information on your report to contact the credit bureaus, and also the creditors which provided the erroneous data to the bureaus. By law, the credit bureaus are usually required to investigate the item in question within 30 days, unless they consider your dispute to be frivolous. You may need to submit documentation that supports your position. Send copies only — never originals. Then, within 45 days, the credit bureaus will notify you with the results of your investigation. Getting even one late payment removed from your credit report can improve your FICO score dramatically.

Ask for a little grace

Sometimes, a creditor may be willing to “help you out”. In cases where you make a relatively small slip-up, with a creditor you’ve never been late with, you can sometimes get a late-payment “waived”. It’s always a good idea to make a phone call and to ask for a little grace. There are many examples of creditors removing a late payment from your credit report if there’s a legitimate story behind what happened, and if you can explain what steps you’ve taken to avoid a repeat occurrence. This works best if you catch the delinquency early and bring the account current right away.

Settle up collections, charge-offs, judgments and liens

Old collection items, credit card charge-offs, and judgments and liens can hurt your FICO score, too. If you’ve got any of these on your credit report, it’s time to contact your creditors and collection agencies and to settle up one-at-a-time. First, settle the accounts which went delinquent within the last 24 months because these more recent accounts create the biggest drag on your FICO credit scores. Then, in looking at your collection items over 24 months old, proceed with care. This is because FICO puts the most weight on your recent credit history, which encompasses the last two years only. This is why your FICO score may drop when you pay off a collection account over 24 months old. Once the account is paid, it becomes “recent”, causing damage to your score. In many cases, you can negotiate with your creditors to remove a trade line completely in exchange for settling an account for its full balance. You need to call your credits first, however, to find out.

Improve your debt utilization ratio

Another way to improve your FICO is to improve your “amounts owed”, or debt utilization ratio. Debt utilization makes up 30% of your FICO credit score. Debt utilization is a measure of how much you money you owe to creditors as compared to how much credit is available to you. The FICO scoring model takes into account the utilization of each individual credit account; and the utilization of all of your credit accounts combined. For example, if you have five credit cards, each with a $2,000 limit, you have a total $10,000 available credit over all five accounts. If you carry a $1,000 balance on one of the five accounts, you would have a 50% utilization on one card and a 10% utilization over all of your credit. In general, debt utilization of 30% of less is good for FICO scores. Utilization over 30% is often bad. The best way to improve your debt utilization ratio is to pay off debt. Pay revolving accounts down first, followed by your installment debt.

Get Your FICO-Driven Mortgage Rate

Mortgage rates are FICO score-dependent. In general, the higher your credit score, the lower rate for which you’ll be eligible. This is among the reasons why it’s good to improve your FICO score to its highest level possible.

Turbo Mortgage

Turbo Mortgage, LLC is a Technology, Marketing, and Mortgage Education company. Sammy Ray Trantham (NMLS #208667) performs licensed origination settlement services sponsored by Rubiola Mortgage (NMLS #270635) using the assumed name of Turbo Mortgage with the consent to Turbo Mortgage, LLC.

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NMLS #208667
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8700 Crownhill Blvd.
San Antonio, TX 78209

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