Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want. The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)
It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate. Today it is almost impossible to find a home for someone with a credit score below 620, so we work with the credit challenged to up those scores.While credit repair is necessary for some, it's not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing. There is a way to receive a rapid rescore, but it costs about $30 per tradeline, per agency. For example, if someone has paid down a credit card and wanted a rapid rescore, it would cost $90...$30 each for Equifax, Experian, and Transunion.
Brian Allen is a mortgage advisor for Capital Mortgage, a national lender based in State College. He can also be heard every Saturday morning as part of Coaches Corner on 970 AM WBLF. If you would like to receive a free Credit Scoring Booklet, please contact Brian at (814) 272-0125 or email him at email@example.com