Posted by genieSABRE on Feb 27, 2012
How to Repair Your Credit and Improve Your FICO Credit Score

How to Repair Your Credit and Improve Your FICO Credit Score

Why It Is Important To Repair Your Credit


Source: Hannif Highclass
Publish:Toronto Real Estate Blog: Feb 27, 2012

What you should expect

A healthy credit score is virtually the most crucial element in the mortgage approval process. A bad credit score will break any chance of getting a mortgage unless you have a very hefty down payment.

So you’ve had a few problems getting the bills paid lately, and you’re wondering what you can do to repair the damage to your credit.

Credit reporting companies such as Equifax and TransUnion determine your credit score based on your credit management patterns. Patterns are established over time, not over night.

It’s important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire.
Beware of any advice that claims to improve your credit score fast.
The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. They are divided up into categories based on the data used to calculate your credit score.

7  Tips On Improving Your Credit Score

  • Stop Making Late Payments  If you are making late payments on your credit cards or other bills, then your credit score is taking a beating. Late payments are one of the leading causes of poor credit scores. Do your best to avoid missing your payment deadlines. Even if you cannot pay off your bills in full each month, you should at least make the minimum payment listed on your billing statement. Over time, this will help to pull up your credit score.

    Four Things Happen When You Pay Late

    By LaToya Irby, Guide

    • Your creditor will charge a late fee. Your next billing statement will include a fee for the late/missed payments. Late fees typically range from $15 to $35. You’ll receive a late fee each month your payment is late.
    • Your interest rate will increase. Creditors don’t just penalize you with a fee, they’ll often increase your interest rate to the default rate. This is the highest interest rate charged by a creditor usually as a penalty. The higher interest rate increases your finance charges making it more expensive to carry a balance. If you make six months of on-time payments, your card issue is required to give back your pre-penalty rate.
    • The credit bureaus are notified when your payment is more than 30-days late. An entry is added to your credit report and will stay for seven years.
    • Your credit score will drop. Because payment history makes up 35% of your credit score, late payments can have a significant effect on your score affecting your ability to get new credit in the future.
  • Take On Some Debt, But Not Too Much  If you don’t have any credit cards and you have never taken out a loan, then your credit score is probably pretty crummy. Once you have secured a credit card, you should start using it to pay for your normal everyday expenses such as gas, groceries etc. Make sure that you do not use the credit card to buy things that you cannot afford. Taking on a car loan, a mortgage and additional credit cards can also help to improve your credit score as long as you make your payments on time. In order to determine whether you have too much debt, you need to calculate what percentage of your monthly take-home pay goes toward paying consumer debt. Add up all of your monthly debt payments excluding your mortgage and divide that by the amount of your take-home pay. If the amount is 15% or more, you probably have too much debt and need to take measures to reduce your monthly debt payments.<br>

  • Don’t Close Your Credit Card Accounts  Closing your credit card accounts hurts your credit score. This is because the credit agencies view closed accounts as a sign that you have run into financial trouble and need to cut off your access to credit. If you have credit cards that you no longer use, cut them up, but keep your accounts open.Additionally, the credit agencies like to see credit card accounts that have been open for a long time. This shows them that you have a long history of using credit. Therefore, you should never close the credit card accounts of your oldest cards. <br>

  • Don’t Open Too Many New Credit Card Accounts  If you open multiple credit card accounts over a short period of time, your credit score will likely suffer. This is because the credit agencies will think that you are in financial distress and need access to a lot of money. Protect your credit score by spacing out your applications for credit.<br>

  • Don’t Co-Sign Co-signing for a loan, credit account or service agreement can hurt your credit if the person that you co-sign with does not pay his share of the bills. For example, many parents co-sign on an apartment lease so that their child can get approved to rent an apartment. However, if the child misses a rent payment, the credit score of the parents will be damaged. To avoid someone else ruining your credit score, avoid co-signing for anything.<br>

Proverbs 17:18 (NKJV):

A man devoid of understanding shakes hands in a pledge, and becomes surety for his friend.

It is poor judgment to co-sign a friend’s note, to become responsible for a neighbor’s debts.

This is straight from the Bible, folks! I didn’t say it, although I completely agree with it. Co-signing is a bad idea. Even though you may have good intentions, co-signing a loan for anyone, even a family member, is just not a good idea and “poor judgment” according to the Bible.

  • Check Your Credit Report A Least Once A Year Identity theft happens all of the time. If someone steals your identity and racks up a ton of debt that you don’t know about, your credit score can take a nosedive. The best way to prevent this from happening is to check your credit report at least once a year for suspicious activity. (For more information on identity theft)

    Having good credit is important. If your credit score is currently subpar, take note of these tips to give it a much needed boost. This will pay off when you want to buy a house, buy a car or get approved for another financial transaction.

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Credit Help / Mortgage Approvals

Call: Hannif Highclass @ 416-444-4252



Quick Fix Credit Repair
Be wary of credit repair scams! There are a ton of shady companies out there that make outrageous claims about how they can fix your credit score overnight and remove all negative marks on your credit report. Do not sign up with any company advertising a quick, painless and easy fix.
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