Credit Report & Score

Tips to Improve Your Credit Score

Your credit score is a measure of the risk you pose to someone who is willing to lend you money. Your score is calculated using a standardized formula. There are many factors that could damage a credit score, including late payments and poor credit card use. According to Fair Isaac, 65 % of the credit score weight is based on 1) payment history, and 2) amounts owed.

Lenders may use your credit score to determine whether to give you a loan and what rate to charge. The better your credit score, the better the rate you can get on a loan, and the more money you can save in the long run. Here are some tips to improve your credit score:

1. Pay your bills on time.

2. Review Your Credit Report annually for errors. Avoid credit repair agencies who claim they can “fix” your credit report and score for a fee. Many of these agencies make false promises. You can do as much as a credit repair agency on your own without paying a fee!

3. Minimize your number of credit card accounts.

4. Minimize your number of credit applications. (Every time you respond to a credit solicitation, your credit score could be adversely affected).

5. Avoid maintaining high balances on your credit cards. Try not to exceed 50 percent of the card’s limit. High outstanding debt can adversely affect your score.

6. Avoid exceeding your credit card dollar limit.

7. Try to avoid making new “problems.” Old problems in your credit history have less of an adverse impact on your credit score than new problems! Newer better credit decisions demonstrate that you are managing your credit well.

8. Avoid wage attachments, liens and judgments. They are considered serious and will heavily impact your credit score. Bankruptcies will remain on your credit report for 7-10 years.

Your credit report and credit score can have an impact on both your ability to get a mortgage and the rate at which you get your mortgage.

Credit Report

The federal Fair Credit Reporting Act requires each of the national consumer reporting agencies, Experian, Equifax, and TransUnion, to provide you with a free copy of your credit report, at your request, once every 12 months.

Previously, consumers had to call each of these agencies separately to order their credit reports.

You can now order your credit reports in one of three ways:

Request by phone: (877)-322-8228

Request online: http://www.annualcreditreport.com
This is the only online source authorized to provide you with a free credit report: beware of other sites that may look and sound similar.

Request by mail:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Once you receive your credit report, review it for any inaccuracies. If your credit history has improved (i.e., you have been paying your bills on time over the past couple of years), you may be in a position to refinance into a fixed rate loan that would save you from payment shock (large and sudden increases in monthly payments, occuring primarily in interest-only products and option-adjustable–rate mortgages (option-ARMs)) and cost you less in the long run.

Credit Score (or FICO® Score)

Although you are entitled to a free annual credit report, obtaining your credit score, sometimes called a FICO Score for the methodology developed by the Fair Isaac Corporation, will cost a nominal fee.

Your credit (FICO) score is a number that lenders use to figure out how much they will lend to you and at what price. People that make regular and timely payments are the “best” customers and get the lowest rates.

To order your score, contact the national consumer reporting agencies at (877)-322-8228 or http://www.annualcreditreport.com.

Credit Counts!

For a $300,000, 30-year fixed mortgage, see how your monthly payments can be affected by your score:

Score	National Average Rate	Monthly Payment
500-579	10.625%	$2,772
580-619	9.639%	$2,553
620-659	7.332%	$2,063
660-699	6.522%	$1,901
700-759	6.238%	$1,845
760-850	6.016%	$1,802
Source: http://www.myfico.com Reflects rates as of October 17, 2007