Improve Your Credit Score

Improve Your Credit Score



Suggestions on what you can do right now

A credit score reflects credit payment patterns over time, with more emphasis on recent information. Ways to improve a credit score generally include the following:

· Pay your bills on time. Delinquent payments and collections can have a major negative impact.

· Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score.

· Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score.

· Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.



Know which items can improve credit scores the most

· Paying your bills on time is the single most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time.

· Minimize outstanding debt, avoid overextending yourself and refrain from applying for credit needlessly. Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly.

· Pay your bills and wait. If you do have negative information on your credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you may want to pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores.

One common question that many consumers have regarding their credit score involves understanding how very specific actions will affect it. However, it is impossible to provide a completely accurate assessment of how one specific action will affect a person’s credit score. For example, someone might ask if closing two of his or her revolving accounts would improve his or her credit score. While this question may appear to be easy to answer, there are many factors to consider. Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).



How Long Does It Take to Rebuild a Credit Score?

Actually, you don’t rebuild the credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age. Delinquencies remain on your credit report for seven years. Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 15 years. Inquiries remain on your report for two years.



If you have any questions regarding your credit score, please feel free to contact Steven L. Bechtolt, Vice President, Wisconsin Community Bank at sbechtolt@thewcb.com or 608.328.4016

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Bad joke. Just poking fun at myself

Q. What does a Realtor call a phone call from a telemarketer in the winter?

A. A HOT prospect

Home buying costs going up

Since FHA’s reserve account has been under the required 2%, HUD has decided to start raising upfront mortgage insurance premiums (1.75%-2.25%), increasing down payment for lower credit scores, and reducing allowable seller concessions from 6% to 3%. These changes will take affect this spring, possible as early as April. What that means for a buyer is buying a house in months to come will cost more than today. FHA has taken up 30%-40% of the purchase market due to their low down payment and flexible credit criteria so this will impact A LOT of first time buyers.
Between the anticipated rate increases once the government steps out of the market and higher cost to get a low down payment loan…home financing will inevitably get more expensive. If you have been on the fence about buying a home, delaying this process any longer will cost you more long term. Call me today at 608-214-9844 Scott Larson Towne Square Realty

What is a Abstract? An abstract of title is a written history of all the recorded documents and proceedings related to a specific property. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase a clear, marketable and insurable title.

Pre-approval Letter
A pre-approval letter, is harder to obtain, but gets the tumbs up from sellers. The home buyer will go through the actual approval process including, but not limited to, credit checks, debt to income ratio surveys and verification of down payment. The pre-approval letter does state that the bank has made a preliminary approval of the loan and is willing to complete the loan process in order to finalize the sale. The pre-approval letter does not, however, lend a definitive answer as to whether the sale will go through. Before a final sale, the buyer will again have to go through a credit check and present the down payment.

Pre-qualification Letter

A pre-qualification letter is one of the easiest documents to obtain from a lender. The prospective buyer will set an appointment with a bank. At the appointment, the loan officer will ask simple questions about income, debt and savings. The answers to these questions will render a quote, of sorts, as to how much the buyer can afford to spend. There will be no verification of income or credit worthiness checked during this appointment. The pre-qualification letter in no way binds the bank to a loan for a home sale. On the contrary, there are actually clauses within the letter than relieve the bank from any legal obligations. It is better to have a Pre-Approval letter. I will discuss this type of letter in my next blog.