Articles & Tips
Credit Score Repair to Improve your Credit Rating
Your credit rating is an important determinant of whether you will be approved for a home mortgage. In addition, borrowers with higher credit scores not only may see their mortgage application approved quickly, but they also can qualify for mortgage loan products with the best mortgage rates. If you are concerned about your credit rating, it's probably time to understand credit ratings and possibly to set up an action plan for credit score repair.
In order to examine your credit rating, you need to obtain a copy of your current credit report. The good news is that according to recently passed legislation, you are entitled to a free copy of your credit report once per year from each of the three major credit reporting agencies. To obtain your credit reports, you will need to contact Equifax, Experian, and TransUnion individually; you can use their websites to request your free credit reports to make this task quite easy and to receive your reports quickly.
Once you have your credit reports in hand, go through each line carefully to see if any items are in need of credit score repair. If you see information in your report that is wrong, you can contact the creditor to see if they can update your information. If this is not possible, you may be able to insert a short explanation that tells your side of the story for any items that you feel are wrong.
Another step that you can take in the credit score repair process is to distribute your existing debt as evenly as possible across your credit cards. This ensures that your ratios of debt to your available credit are as low as possible, which has a positive impact on your credit rating.
While it might be tempting to close some of your credit accounts that you no longer use for credit score repair, doing so may actually hurt your credit rating. Closing an account that you have had for a long time may cost you the benefit of showing part of your long-term credit history. In addition, closing an existing account reduces the total amount of available credit that you have access to, which in turn hurts your debt-to-total credit ratio.
If you are actively shopping for a mortgage loans or some other type of financing, each time a lender checks your credit report can trigger a drop in your credit score. To aid in credit score repair, try to minimize the number of times that lenders inquire into your credit history. The exception to this rule is if you can group all of the credit inquiries into a fourteen-day period; the credit bureaus count multiple inquiries that occur within a two-week window as a single credit inquiry.
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