For those interested in buying your own home, there’s a very important point that loan officers look at when deciding the interest rates of your loan. Your credit rating. A credit score is a numerical rating of your credit worthiness and usually range from 300 to 850. A high number indicates to potential creditors that your credit habits are admirable. It shows you make your payments on time as agreed and are responsible with financial matters. You carry debt that’s much lower than your credit limit. And there’s few or no derogatory marks on your free three credit report . If you exhibit a high score, loan officers are more inclined to approve your loan. It also means enjoying better interest rates.
How to see your score
Legally you’re allowed to get your credit reports totally free once a year. But usually your credit score doesn’t come with these annual free reports. It needs to be purchased separately through the 3 credit agencies. But there are free deals to get a credit score for free from the three reporting agencies. But it usually requires joining a free trial membership to their credit monitoring program.
Why get a FICO score
Each credit bureau produces their own score numbers, but you want to see is your FICO score. This is the score that most loan officers use in making important loan decisions. Curently Equifax offers a FICO score. You can also purchase it from FICO directly. FICO is a different entity from the 3 agencies.
The 30 percent formula
First steps to take is to pay down your revolving accounts like your credit cards. The reason for this is that creditors desire a large gap between your credit limit and your debt amount. There’s nothing bad to charging large amounts and paying it off every month. But it won’t improve your rating. If your purpose is to increase your score, then you should stick with the thirty percent formula and use less than 30 percent of the maximum.
First correct the big mistakes
Significant mistakes on files gotten from the freecreditreport programs include any acounts that isn’t yours. Other mistakes are accounts mentioned as unpaid or were in collections more than seven years ago. Derogatory items prior to seven years are supposed to be erased from your reports. In the case of bankruptcies, it’s on your files for ten. But continue using your oldest card accounts that don’t have bad marks. These give weight in the scoring calculations. Just make a small purchase every month and pay it off every month.
Check the credit limits also
Sometimes vendors report a smaller amount to the credit reporting agencies than the correct one. Ask the vendor to correct this information. Also if there’s late payments indicated on your files, ask the creditor to erase them. The latter sometimes works for people with decent payment records. The creditor may not always consent to this, but it’s worth giving it a shot.
Last but not least
Challenge the accuracy of anything on your credit reports not mentioned as “current” or “paid as agreed”. Anything the credit bureaus can’t confirm as accurate after a given period has to be removed from your file. ’wink wink nudge nudge’. But don’t overdo this. Otherwise your claim will be seen as frivolous. First try disputing a few of your oldest accounts with derogatory marks. Then wait a few months and challenge a few more.
By following these easy tips to clean up your credit reports free, you should considerably improve your credit score numbers.
RSS FEED
