Fast Track Credit Score Improvement

At Bankrate.com there was an interesting article on the subject of credit score repair.  When looking to improve ones score, most buyers hear the same advice: remove mistakes and pay on time for about a year.

But this article talks about bumping up your credit score when you are on the border of getting a good rate or a high rate.  Most banks give the good rate to borrowers with a 700 FICO score or higher, while a 698 score could cost you 1.2 percent.  If you are at 720, don't worry about improving your score to 740--you are already in the sweet spot.

So for the rest of us, these tips should put us on the fast track to credit repair:

• Repair errors first: payments that you know were not late, paid off debt that is still showing up, and negative debt that is over 7 years old should all be removed.
• Pay down some of the debt: You really should only use  about 20-30% of your available credit.  If your cards are hovering at the max, pay them down.  "After 60 days", says David Herpers of Amerisave Mortgage Group, "it is possible to increase your score 20 points by paying down your credit lines."
• Forget about grace periods: Make payment from now until you buy the house on time, before the grace period.  Banks like early payments and low balances.
• Don't close your accounts: keep old accounts open, in fact if it has been a while since you used an account, go buy something on it, then pay it off the following month.  Closing accounts can affect what is called the utilization ratio, which is the amount of debt divided by your total available credit.  The utilization ratio should be below 50%.  If you do need to close an account, don't close the old one.  A long credit history goes a long way and if you only have new cards, then you look like a new borrower.

Comments

[M Johnson]

Thanks for the information, I did'nt know about this, it's so much info that's useful.

[credit rating]

So much difference between 698 and 700?

[credit repair services]

I do think that 1.2 percent matters a lot.