Eight Quick Credit Improvement Tips

As the mortgage industry continues to evolve, one thing for sure is that your credit history will be one of the most critical factors in obtaining home loans. Here're are 8 quick tips on how to improve and maintain a good credit history:

1. If possible, get a business credit card - most people don't realize that over 90% of business credit cards do not get reported to personal credit reports. If they are not reported, they are not scored, period.
2. Settle for deletion, or at least zero out all unpaid collection accounts less than 24 months old - when payment is made on a collection account that is less than 24 months old, the score will either stay about the same or increase a few points. Settling in exchange for deletion is ideal, but not always possible. Given the fact that the collection account will keep selling to other collection agencies in the future, it is best to deal with it while it is still young.
3. gets rid of all past due amounts on non-collection/charge-off accounts and make sure to pay before the due date until after the loan closes to be safe - credit scoring software penalizes for keeping accounts past due, so past dues destroy a credit score.
4. Get rid of your late payments - contact all creditors that report late payments on their credit and request a good faith adjustment that removes the late payments reported on their account.
5. Ask for a credit limit increase on your credit cards and either pay-off if possible or at a minimum evenly distribute the balances you are carrying on the revolving debt - credit scoring software likes to see borrowers carry credit card balances as close to zero as possible and also see that they have been trusted with a lot of credit - which is why increasing their limits is good.
6. Do not close your credit cards - closing a credit card can hurt your credit score, since doing so affects your debt to available credit ratio.
7. Keep old credit cards active - 15% of a credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if old credit cards have horrible interest rates, closing those cards will decrease the average length of time a client has had credit.
8. Pay down Negative Amortization mortgage balances below the original amount borrowed to increase the score - most people don't realize that owing more than the original amount borrowed on a loan is a negative event to the credit score.

If you need more specific information on any of these tips, feel free to contact me.