Top 5 Ways to Improve Your Credit Score

How Long To Improve Your Credit Score?

This commonly asked question was posed to our experienced, in-house mortgage agents, Betty Talbot and Gidia Molinaro of Centum Omni Mortgage Corp. We appreciate their helpful responses.

Betty Talbot gave her Top 5 Ways to Improve Your Credit Score.

  1. Obtain a copy of your credit report, correct any errors and pay off or negotiate settlements on any old outstanding bad credit.
  2. Make all monthly credit payments by the due date, even if you are only required to pay a small minimum payment.
  3. Keep credit card balances low – strive for a balance of 50% or less of the approved limit.
  4. Limit credit applications, as new applications affect the overall credit score.
  5. Be prudent when applying for credit; length of time between credit bureau inquiries is important

Gidia Molinaro gave a minimum credit history.

According to Gidia, when you are looking to improve your credit, most lenders want to see a minimum of 12 months successful debt repayment history.

What if You Don’t Have a Credit History?

If you don't have any credit history and plan on purchasing a home in the near future, ensure you apply for some sort of credit and again use it for a minimum of 12 months. You may have a great credit score after 6 months, however, the length of time you've had and used the card is too short and this may result in a decline by the lender if you apply for a mortgage prematurely.

Insurers Look for Two Lines of Credit Betty added that one credit card may not be enough for a Hi-Ratio mortgage approval in buying a home. A Hi-Ratio Mortgage is one that has to have default insurance because the downpayment is less than 20% of the home’s purchase price or appraised value, whichever is less. Default insurers, like Genworth or CMHC, are looking for a minimum of two “trade lines” with a limit in excess of $1000 and, as Gidia pointed out, a minimum of 12 months of credit activity reported to the credit bureau.

How To Ensure Credit Report Accuracy

Both professionals agree that it’s a good idea to advise consumers to obtain a copy of both their Equifax and TransUnion credit reports every year to ensure accuracy. When accounts are settled--like an old unpaid utility or cell phone bill--consumers should obtain a release letter from the creditor if paid directly to the creditor. This is important because if these accounts have been placed with a collection agency but paid directly to the creditor, nobody advises the credit bureau; so the debt is not removed.

For a confidential review your credit history, contact one of these two mortgage professionals. They work with people on a daily basis to get their credit back on track.

Posted by Eugene Pilato on March 15, 2013
Cheryl Sebrins

Cheryl Sebrins

Sales Representative
CENTURY 21 Today Realty Ltd., Brokerage*
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