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RAISE YOUR CREDIT SCORE 50 POINTS IN FORTY-FIVE DAYS

RAISE YOUR CREDIT SCORE 50 POINTS IN FORTY-FIVE DAYS. Bruce Gustafson (303) 596-0780 bruceggustafson@msn.com Crestline/Universal Lending. What Is Your FICO Credit Score?.

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RAISE YOUR CREDIT SCORE 50 POINTS IN FORTY-FIVE DAYS

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  1. RAISE YOUR CREDIT SCORE50 POINTS IN FORTY-FIVE DAYS Bruce Gustafson (303) 596-0780 bruceggustafson@msn.com Crestline/Universal Lending

  2. What Is Your FICO Credit Score? • Forecast of how well you will repay a loan as agreed during the next 24 months – the higher the score, the better the forecast that you will repay • Snapshot of your credit history at a particular point in time • Only includes factors related to an individual’s credit • Always changing

  3. Who uses credit scores and reports? • Financial institutions • Retail stores • Utility companies • Landlords • Insurance companies • Employers

  4. Frequently Asked Questions • How long does bankruptcy filing stay on credit report? 10 years • Will my credit be affected while I “shop for rates”? No, as long as your inquiries are for specific loan types and within 45 days. • Will my score drop if I apply for new credit? If it does, not much. If you’re applying for a mortgage loan for a short period of time (45 days) then these requests are treated as a single inquiry • Does my score determine whether or not I get credit? No, because most lenders use a number of facts to make credit decisions.

  5. Small mistakes thatcould mean bigger problems • Personal identification information is incorrect • Employment history includes a company where you never worked • Accounts are listed more than once • There is a hard inquiry from a company you did not submit an application to • An account is missing

  6. Other Common Misconceptions • Balance transfers don’t hurt score • Credit history contains only current account status • Delinquent accounts now made current have no negative impact on score • Bankruptcy “clears” both debt and credit record • Divorce decrees regarding joint accounts must be honored by creditors • Student loans not in repayment are not counted as debt

  7. Fico Score – Mortgage Payment$400,000 Home Loan Fico ScoreAPRMonthly PaymentExtra Interest Paid 760-850 4.397% $2,002 700-759 4.619% $2,055 $19,080 680-699 4.796% $2,098 $34,560 660-679 5.010% $2,150 $53,280 640-659 5.440% $2,256 $91,440 620-639 5.986% $2,395 $141,480

  8. WHAT MAKES UP A CREDIT SCORE? • Payment History 35% • Balances Carried 30% • Credit History 15% • Mix Of Accounts 10% • Inquiries 10%

  9. PAYMENT HISTORY – 35% • Bills Paid As Agreed • Most Recent 6 Months • Highest Weight On Highest Pay History • Mortgage • Biggest Payment

  10. BALANCES CARRIED – 30% • Keep Balances As Low As Possible • Outstanding Balance Versus Available Credit Affects Credit Score For example: Credit CardBalanceAvailable Credit Visa $10,000 $10,000 Visa $0 $10,000 • Leave Credit Card Balance As Is = Lower Credit Score • Spread Balance Between Cards ($5,000 each) = Higher Credit Score • Mortgage / Installment Less Of Factor

  11. CREDIT HISTORY – 15% • Longer Credit History = Higher Credit Score • Long Credit History Paid As Agreed / Positive Impact To Credit Score • Never Close Credit Accounts - Especially If Long History – Or Negative Impact To Credit Score

  12. MIX OF ACCOUNTS – 10% • Ideal To Have Installment & Revolving Accounts • Mortgage Loan • Auto Loan • 3 - 5 Credit Cards (More is OK too) • HELOC Should Be Greater Than $40K Or Will Report As Revolving Account Versus Mortgage

  13. INQUIRIES - 10% • Shopping Around? Pull Multiple Reports For Mortgage and Auto 1 Inquiry Within 45 days (for each) • Each Inquiry Averages 5 Points • Only First 10 Inquiries Count Each Year • After 10, Will Not Affect Credit Score

  14. INQUIRIES THAT DO NOT HURT THE SCORE • Job Related • Insurance / Utilities • Account Review • Personal (www.annualcreditreport.com) and obtain free credit report) • Promotional (pre-approved offers in the mail)

  15. BLEMISHED CREDIT CAN BE COSTLY • Low Credit Score = Higher Interest Rate • Mortgage Loans • Credit Cards • Auto Loans • Insurance Premiums

  16. STEPS TO TAKE TO INCREASE CREDIT SCORE 50 POINTS • Pay Past Due Accounts • Get Rid Of Late Payments • Have Credit Limits Increased • Do Not Close Old Accounts – Keep Active

  17. PAY PAST DUE ACCOUNTS • Pay All Accounts That Are Past Due • Past Due Accounts Can = 1 Day Late • Severely Hurt Credit Score

  18. HAVE LATE PAYMENTS REMOVED • Phone Creditor And Request Late Payments Be Removed • Be Persistent – Work Your Way Up The Ladder • Always Get A Letter That Documents: • Name / Address / Account Number • Specific Late To Be Removed • On Company Letterhead / Signed By Employee

  19. INCREASE CREDIT LIMITS • Every Six Months Request An Increase To Credit Limit On Credit Accounts • Have Creditor Base Increase On Credit History • If Creditor Must Pull Credit, Do Not Continue; Will Lower Credit Score

  20. DO NOT CLOSE ACCOUNTS • Keep All Accounts Open • Use Old Accounts Periodically – Charge Small Amount - Pay off Immediately • Closing Accounts With A Long Credit History Will Hurt Credit Score

  21. SUMMARY • Borrow When You Do Not Need It • Keep Balance To Limit Ratio Low • When Creditor Removes Late And Provides Letter – Use Credit Rescore • Never Payoff A Collection / Judgment When Applying For A Mortgage Loan • Ensure that creditors reports the credit limit. When a credit limit is not reported it may look like the card is maxed out when it is not.

  22. SUMMARY • Get (or keep) the good stuff going • Build NEW good credit versus dwelling on old bad credit. New on-time payments improve your credit more quickly than paying off old debt • Do not apply for new credit cards to replace old cards. Keep revolving accounts open – to lengthen a credit history and keep total credit limit higher than outstanding debt. • Increasing Credit Score By 10 Points = Interest Savings of $100,000 Over 30 Years ($500K Mortgage Loan)

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