Good Credit? Bad Credit? No Credit?

There are many options to find out your score:

Your credit card – Most credit card companies will provide your score for free – Typically this is your Fico Version 8 score

Credit Monitoring – Sites like Credit Karma also provide you with a score – Credit Karma use the Vantage Scoring model – this model can sometimes vary quite a bit from your Fico Score.

Credit Bureaus: Experian gives you your Fico 8 Score

To find out your “Real” score first you need to determine what you are applying for (Mortgage, Credit Card, Auto, Personal Loan, etc…) then you can check with the company that will be pulling your credit and find out what scoring model (Vantage or Fico) and what version they will use. Most companies will either have this in the offer they sent you or listed on their website.

Let’s focus on your mortgage score:

If you want to know what score your mortgage lender will see when they pull your credit report you have a couple of options. 

First ask your lender what scoring model and version they use. If its Fico version 2, 4 and 5. You can check these scores by signing up at www.myfico.com  for a fee and selecting – show me the scores that lenders use. 

Or ask your lender if they can do a soft inquiry  on your credit.

Soft inquiry verses Hard inquiry

There are 2 types of inquiries that can happen on your credit

Soft Inquiry- Does not affect your score. Typically used by Insurance companies, and others to establish your creditworthiness. Geneva Financial can do this if you are not quite ready to purchase yet but would like to ensure that your credit score is where you need it to be.

Hard Inquiries –  These do affect your credit score. Typically they can decrease your score anywhere from 1 to 10 points. Hard Inquiries stay on your credit report for 2 years and typically affect it for the 1st year. These are used when you are ready to start your loan for a mortgage, car, credit card etc… There is also a small grace period when you are shopping for a mortgage or auto loan (14 to 45 Days) where multiple hard inquiries for the same product are counted as one hard inquiry. So you should only authorize a hard inquiry when you are ready to move forward.

So now that I know what my score is how do I increase it?

Here are some Tips!

Obtain a copy of your credit report

You can get a copy of all 3 credit reports from www.annualcreditreport.com

Review your credit report for accuracy 

Check each of your credit lines to make sure they are accurate. This is especially true for collections.

Collections affect your credit based on the date that your account was first reported past due.  Many times a collection agency will purchase your account from the original creditor and that date will be inaccurate.  You will need to obtain or find documentation showing the correct date and then provide it to the credit bureau (Experian, Equifax or Transunion) by opening a dispute. This can help increase your score.

Have your Collections Deleted: This is very important! – if you just pay off your collections they will remain on your report and affect your score for 7 years. Collection agencies typically don’t get paid unless you settle the debt and are willing to remove the collection from your report completely if you pay the debt or a portion of the debt that they agree to take.  GET IT IN WRITING! By email or letter before you pay so they have to hold up their end of the deal.  Keep in mind that not every Collection agency will agree to do this but many will and sometimes it just takes persistence and talking to the right person which may take multiple attempts.  Talking to a collection agency can be intimidating and frustrating but the effort is worth it!

Bring down those balances:  High credit utilization (The amount you owe verses your credit limit) has one of the biggest impacts on your credit score.  It’s much easier to pay with a credit card for things than to pay cash and justify that you will pay it later, but then things happen and it’s tough to make more than a minimum payment. 

The only way to start reducing your debt is to Make A Plan.  Look at what you are spending your money on and decide. Do I really need this?  If you don’t, then start with the Credit Card you owe the lowest amount on.  Use those extra dollars to pay it down to a 10.00 balance and keep it there, charge something minimal and pay it off every month. Then move on to your next largest amount and repeat the process.  It may take time but you will begin to see the results much more quickly with this method.

Have at least 3 tradelines reported on your credit 

A good mix of open credit lines will help increase your score. 

Keep established tradelines open

One of the many factors that determine your score is the length of time you have established credit.  So you followed the advice above and paid off all 20 of your credit cards. If possible leave the cards open that you have had the longest as this helps with increasing your score. If you literally have 20 credit cards you should probably consider closing some!

Experian Boost – Sign up for a free Experian account at www.experian.com and then sign up for Experian Boost. Experian Boost allows you to use non reported tradelines like your utility bill, phone bill etc to instantly boost your score.  If you have not made on time payments for those accounts they don’t add it so there literally is no downside to doing this.

QUICK TIP– Once you sign up for an account you will receive updates when things change on your report and also your free fico 8 score, but you will also receive promotional offers for credit cards, free balance transfers, insurance etc so be careful when you get these offers and decide if they will actually benefit you.

Still not sure where to start?

We have worked with many of our homebuyers to assist in raising their credit score so they are ready to purchase.

Here is how it works:  If you need to increase your credit score  we can order a rescore analysis through the company we use to pull your credit. A rescore analysis uses an algorithm to determine exactly what  steps you need to take to achieve a certain credit score.   We give you tho
se steps and you can follow them to raise your credit score.  There is no charge for this service and it works! 

Keep in mind we do mortgage loans, we are not a credit repair company. Credit repair companies typically charge you a fee for their services. We are in the business of helping clients so they have the best options available when they are getting prepared to achieve home-ownership. 

Our company culture and motto is “Be A Good Human”  so  whether you are planning to buy a home in 6 months or 6 years or just have a question, we are happy to help you reach your goals. 

Reach out to us today and we can help!