Tips on how to improve your credit scores
Improve your credit scores to qualify for Home Loan
If you have prior bad credit or have no credit, chances are that you have low credit scores. A low credit score can be a hurdle when it comes to getting a mortgage loan approval. There are very simple ways to improve your credit scores without much effort. For those who have no credit or did not have active in the past two or three years, you need to establish at least three credit vendors who report your payment history to the three major credit bureaus: TransUnion, Equifax, and Experian. By credit vendors, I mean credit cards, automobile loans, mortgages, and other installment loans.
Low credit balance will improve your credit scores
If you do have credit such as credit cards, pay down those credit cards so it shows you have high open credit limits available. For example, if your balance on your credit card is $900 and your credit card has a high credit limit of $1,000, pay down your credit card down so your balance is less than $100. This will boost your credit scores substantially. Paying down your balances on your credit cards can boost your credit scores by 50 to 100 points instantly.
Monitor your credit report
Dispute all of the negative items that are on your credit report, including charge offs, collections, late pays. If you dispute a negative item, it is the credit reporting agency’s job by law to contact the creditor and request verification. If the creditor does not respond to the credit reporting agency within 30 days of your dispute, the credit reporting agency must delete the negative item from your credit report. This will improve your credit scores by at least 30 points or more.
Deleting recent derogatories will improve your credit scores
On derogatory items you cannot remove by disputing, see if you can negotiate with the creditor. See what they offer you and counter offer them back, hopefully pennies on the dollar but make sure that part of the negotiation is that they need to remove the negative item from your credit report or else tell them there is no deal. Most creditors or collection agencies will remove the negative item as part of the negotiation. Make sure you have everything in writing. This will improve your credit scores by at least another 30 points or more.
Provide proof when disputing your derogatories
If your creditor verifies that a derogatory credit item is valid, redispute it with another reason like that they have the wrong balance amount or that the dates are wrong. They need to verify your dispute and if they do not, the derogatory item must be deleted by law.
Monitor your credit report 3 times a year
Always check for errors on your credit report. Statistics show that more than a third of all credit reports contain errors. These errors will cost you in paying higher interest rates and might even cause you a job since a large percentage of employers run credit background checks as part of their hiring process.
Rebuild and Re-establish your credit with secured credit cards
If you do not have credit or did not have credit for several years, open three secured credit cards with a minimum $500 balances. Each one of those secured credit cards will boost your credit scores by 30 to 50 points. Make sure you pay all of your monthly bills on time.
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