FOR IMMEDIATE RELEASE
CONTACT:
Curtis McNeill 512-335-6601 curtis@blueprintmtg.com
Increase Chances for Loan Approval by Taking Simple but LesserKnown Actions that Raise Credit Scores Cedar Park, TX ,—In a market where tightening underwriting guidelines are making it increasingly difficult to qualify for mortgages, savvy borrowers are finding that following a few simple credit score-improving steps gives them greater control over their credit scores. By increasing their scores, borrowers often secure loans at better terms and lower rates than they would with lower credit scores.
“It used to be that there was very little that an individual could do to affect the underwriting decision,” explains Curtis McNeill, a Mortgage Planner with Blueprint Mortgage Planners a mortgage planning company based in Cedar Park, TX. “But now, I inform my clients that they can improve their credit scores and thereby save tens of thousands of dollars over the term of the loan. I have seen many borrowers go from denied to approved, in fact.”
There are several simple steps that borrowers can take to raise their credit scores on their own, but consumers have avoided taking many of these actions simply because they seem counterintuitive based on hearsay and erroneous assumptions about the intricate and complex credit scoring process.
The first step is to check your account balances. According to the Fair Isaac Corporation, the leading provider of decision management solutions powered by advanced analytics, 30 percent of an individual’s credit score is based on amounts owed. Incorporated in this equation is not only the outstanding debt itself, but also the debt ratio of the account in question. Therefore, consumers wishing to increase their credit scores should check their credit limits and evenly distribute the balances they’re carrying so that each balance accounts for a minimized debt ratio. If the maximum limit for each account is not reported, the credit scoring software will evaluate the account as though it’s at its limit, which makes the borrower appear to have an unreasonably high debt ratio. Lower debt ratios are more favorable. According to an article by Cheryl Allebrand on bankrate.com, a good rule of thumb is to keep credit card balances to 25 percent or less of their limits.
“Reallocating debt is a fairly simple action that a borrower can take to make a definite impact on his or her credit score,” says McNeill. “Even though it’s very simple, it can really make a powerful difference. In some cases, this can be the difference between a great rate and a less-than-favorable one.”
Despite what it may seem, it’s also advisable to keep your credit cards open. Fair Isaac’s scoring weighs the length of time an individual has had credit at 15 percent of the scoring process. Consumers wishing to
raise their credit scores also need to get rid of late payments listed on the credit report, since payment history accounts for 35 percent of the credit scoring equation. Some very reputable credit restoration specialists recommend contacting the creditors that report late payments and requesting a good faith adjustment that removes the late payments reported on the account. If you are a customer in good standing, the creditor may work with you, but this action may require more than one phone call.
A very important step is for consumers to rid themselves of any collection accounts by paying off any delinquent balances. Again, delinquent balances will factor into the consumer’s payment history as well as outstanding balances, which together account for 65 percent of the credit score. Because time is a factor, current collection accounts should be cleared as soon as possible. Next, consumers should pay off past due amounts on delinquent accounts, followed by getting rid of charge-offs and liens. Charge-offs and liens that are older than 24 months do not affect your credit score nearly as much as ones under 24 months, which can seriously damage your credit. If the consumer has both charge-offs and collection accounts, but have limited funds, he or she should pay off the past due balances first, then pay collection accounts that agree to remove all references to credit bureaus.
“With so much emphasis placed on credit ratings, it’s a smart idea for borrowers, especially those with marginal or less-than-perfect credit, to not only gain awareness of their own credit situations, but also to get educated on how the credit scoring process works,” advises McNeill. “Borrowers who educate themselves and get active in managing their credit will have a much better chance at increasing their scores. It’s great that with the reputable tools and solutions available, underwriting rejections no longer have to be a long term sentence.”
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