Improve Your credit report and FICO® Score

By
Services for Real Estate Pros with TheHousingGuru.com

dollar sign

With the economic crisis having decimated the budgets of millions of families, many are wondering if it’s possible to improve your credit report and FICO® score.  And while some have seen their credit scores decline as they fell behind with mortgage payments and credit card bills, the damages can be repaired.  Yes, you can improve your credit report and FICO® score, but it’s not as simple as some of the scam artists would have you believe.

 

The first step is to get copies of your credit report from the major credit reporting agencies; and the credit reporting agencies are mandated to provide you with a free copy of your report annually.  This is not one of the so-called “free” reports you see advertised on TV—those are only free if you subscribe to their service; and that’s not free. Your free credit reports are only available at: www.annualcreditreport.com.  And while you’re checking you may want to purchase a copy of your FICO® score.  It will be offered to you by when you order your report from Equifax.

 

The FICO® score is the only legitimate credit score.  Other scores offered by the various credit bureaus are inconsistent with the FICO® score and are generally not considered by lenders.  Don’t waste time or money with the scores offered by the other credit bureaus; pay for the same score lenders use.

 

The three major credit reporting agencies are:

 

Equifax

P.O. Box 740123

Atlanta, GA 30374

800/685-1111

www.credit.equifax.com

 

Experian

475 Anton Blvd.

Costa Mesa, CA 92626

888/397-3742

www.experian.com

 

Trans Union

P.O. Box 7000

North Olmstead, OH 44070

800/916-8800

www.truecredit.com

 

After reviewing your credit reports and correcting any errors you find, it’s time to begin the steps that will improve your credit score.  A great place to get started is with www.Mint.com, a website that offers FREE money management software.  With tools that allow users to track their spending, the website connects to thousands of financial institutions.  Offering a wealth of services and options, Mint will help you begin learning how to live more frugally.  You may also want to check out www.BudgetTracker.com, another site that I’ve found helpful.

 

Now you’re ready to follow the simple steps of commitment, creativity, planning and patience.

 

COMMITMENT: Restoring your credit requires a commitment to your plan and to your monthly budget.  Don’t be tempted by purchases that will get you “off track.”  Stick to your plan regardless of the temptations that arise.

 

CREATIVITY: Look for ways creative ways to lower your monthly expenses such as: brown-bagging, car-pooling, getting rid of cable TV, home phones or other items that are not necessities.  Visit websites such as www.TheFrugalGuru.com for additional money saving ideas. 

 

PLANNING: Improving your credit means that you have a plan and that you follow it.  Part of your plan is a budget that requires constant monitoring and updating.  And when you become aware of future needs, plan those expenditures so they don’t disrupt your budget. 

 

PATIENCE: Restoring your credit takes time.  Depending upon the amount of damage done, it could be a couple of years or more before you begin to see a significant improvement.  But don’t fall for those scam artists that advertise immediate restoration of credit; it can’t be done—at least not legally.  Unless there are gross errors on your credit report, restoring it won’t happen overnight.

 

Additional Credit Tips:

Limit your requests for credit.  If you are just starting out and attempting to establish credit for the first time, don't open several new accounts in rapid succession.  New accounts lower your average account age, which can significantly impact your score, especially if your credit history is slim.  Additionally, opening several accounts within a short time makes you appear as a high risk.

Avoid multiple inquiries into your credit history.  If you are shopping for the best rate on for a particular purchase (furniture, appliances, auto or home mortgage) try to do your rate shopping within a short time period.  Credit scores are not generally affected by multiple inquiries for the same purpose if they occur within a short period. 

 

Always pay your bills on time.  I recommend using your banks’ bill paying service—they’re much less likely to miss payments, and if they do, you’ll have a record of ordering the payment on time.   Make sure your bank offers the service as part of your checking account.  There should be no extra charge for bill pay; and you shouldn’t really pay for normal checking either.  If your bank doesn’t offer a free checking that meets your needs, look at the offerings from competitors.

 

Pay off high interest credit cards first by applying as much as possible to the balance while paying minimums on other cards.

Maintain the lowest possible balances on credit cards or other “revolving credit” accounts.  A high debt to credit limit will lower your credit score.

Once a credit card balance is paid in full, don’t close the account; keeping it open actually improves your score.  However, don’t apply for additional cards just to increase your available credit; opening multiple accounts could reduce your score.  

 

For those who are overwhelmed by debts and so far underwater that budgeting seems impossible, check with the National Foundation for Credit Counseling (www.nfcc.org), a non-profit agency providing financial counseling throughout the country.  They can provide an honest analysis of your financial situation and will help you get back on track.  But, avoid those services that advertise debt consolidation, many are scams that will only leave you in worse financial shape.

 

Finally, the best advice for improving your credit is to manage your use of credit responsibly.  Use credit only when necessary and pay all your bills on time.  And once you’re back on track, begin a program of regular savings.  Loan officers love to see a program of regular savings for it demonstrates stability and a commitment to your financial future.

 

close

Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. Jeanne & Ralph Janisch ABR CRS Brokers 06/29/2011 11:04 PM
  2. Lina Robertson Jones 06/29/2011 11:46 PM
  3. Lanre-"THE REAL ESTATE FARMER" Folayan 06/29/2011 11:47 PM
  4. Steve Davis 06/30/2011 12:50 AM
  5. Richie Alan Naggar Author PEARLS SERIES of books 06/30/2011 10:14 AM
  6. Lyn Sims 06/30/2011 01:02 PM
Topic:
ActiveRain Community
Groups:
Voice of Reason
The Ninety-ninth Percentile
The Economics of Real Estate
Dedicated Bloggers
America's Best Agents
Tags:
credit repair
credit reports
fico score
consumer debt

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
519,107
Jeanne & Ralph Janisch ABR CRS Brokers
The Durango Home Team at Keller Williams Southwest Associates - Durango, CO
Selling Durango CO homes to good people like you!

Good information!  Excellent to pass along to the readers in our area.

Jun 29, 2011 11:02 PM #1
Rainmaker
729,302
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC - Washington, DC
How much is my Washington DC House Worth?

John www.Mint.com is a website I learned about from some of those financial experts on the Today Show. Thanks for writing this. This one is worthy of a re-blog. Great post.

Jun 29, 2011 11:43 PM #2
Ambassador
881,088
Larry Bettag
Larry Bettag - Cherry Creek Mortgage - Saint Charles, IL
Regional Vice-President

Lanre.....great repost....commitment and patience are the two biggest variables here.  I see all committed getting it up to where they need, but again...patience and commitment are critical!

Jun 29, 2011 11:56 PM #3
Rainmaker
1,292,910
John Pusa
Sellstate Pacific Realty - Glendale, CA
Your All Time Realtor With Exceptional Service

John - Excellent information and tips on improve your credit report and fico score. Thank you for the detailed quality blog.

Jun 30, 2011 12:11 AM #4
Rainmaker
885,190
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Thank you for the post I sometime forget to let my clients know the basics.

Jun 30, 2011 01:25 AM #5
Rainmaker
844,264
Mike Cooper
Winchester Real Estate Sales, Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Pro

Good stuff, John.  I think I'll print this out for my clients.  With this economy it would be very helpful to many!!

Jun 30, 2011 06:49 AM #6
Rainmaker
331,036
Carolyn Nelson
Triad First Choice Realty/Cornwell Properties - Mebane, NC
Sales Agent, Licensed Closing Coordinator

Great Information!

I see blogs, signs, and websites all the time that talks about credit restoration. The best way to fix the problem is to get back on track, manage your money wisely, pay your bills on time, and avoid applying for new credit. If you need to establish new credit, I would recommend getting a card through Capital One with a low credit limit. Never buy more than you can afford to pay off monthly and don't subcribe to those so call freebie reports from the credit bureau. It can cost you between $14.95 and $29.95 monthly.

 

Jun 30, 2011 07:36 AM #7
Rainmaker
895,372
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

John, the last paragraph says it all. Good information and thanks for the links.

Jun 30, 2011 08:26 AM #8
Rainmaker
453,505
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jeanne & Ralph - Thanks. Hope it can help some.

Lanre - I've been recommending Mint for a couple of years; it's a great site.

John - Thanks for the support.

Tim - Sometimes we overlook the basics.

Mike - Thanks!

Carolyn - Good suggestions.

Jun 30, 2011 08:28 AM #9
Rainmaker
1,282,513
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Fabulous post John.  I have never looked up my credit score.  I just keep up with my bills.  When I bought a new car about 5 months ago, I was one less than the maximum score, so they said.

Jun 30, 2011 08:43 AM #10
Rainmaker
453,505
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jay - Even though you do everything right, credit bureaus often make mistakes.  It's a good idea to take advantage of the annual free reports just to verify the info.

Jun 30, 2011 08:58 AM #11
Rainer
232,790
Shay Campbell
Universal American Mortgage Company - Raleigh, NC
Raleigh, NC

John this is good, basic, 101 credit information.  Knowing the "rules" always help.

Jun 30, 2011 09:12 AM #12
Rainmaker
453,505
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Shay - And sometimes we forget to follow the "basics."

Jun 30, 2011 09:57 AM #13
Rainmaker
1,375,464
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

John...outstanding post designed as a public service message presented timely too....definitely re-blog worthy....thank you John... BTW, I am reading your book...fascinating and I like the title and cover "Metamorphosis" and it is not one to put down easily either

Jun 30, 2011 10:10 AM #14
Rainmaker
732,984
Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com
NMLS #216987 - New Lenox, IL
708.921.6331 - 37 yrs experience

John:  Kudos to you on offering this information and roadmap to better credit.  I applaud that you suggest taking charge of your own financial destiny as well.  This is the same suggestion I make when someone asks me about working with a credit-improvement company.  People CAN do this on their own and avoid being charged for it.  I have found that typically the results are poor (if any) from those "helpful" credit-improvement businesses anyway.  The recommendations you make here are solid and point out that there is FREE help to be had.  They just need to inquire to find it in their area. I hope many read this and follow its' suggestions ...

Gene

Jun 30, 2011 10:56 AM #15
Rainer
58,089
David A. Weaver
Buckeye, AZ
20 years helping folks finance their homes.

John,  Great advice, I find that today I spend more time counseling prospects on just this topic than I used to.  Mind if I print your blog out and pass it along.  Well and simply stated info.  It just might get the message across.  Thanks for the post.

Jun 30, 2011 12:09 PM #16
Rainer
137,321
Ron Tissier
DiscoverAtlantaLuxuryHomes.com - Atlanta, GA
Atlanta Luxury Real Estate Sales & Consulting

All good advice John!  Let me add that the only legit site to get true FICO scores is www.myfico.com.  You can get your "real" FICO scores here; the ones that lenders use, along with current credit reports from Equifax and TransUnion.  For some reason, Experian no longer provides credit reports online.  In addition, everyone should check their credit reports at least once a year for mistakes and errors.  You'll be amazed at some of the crazy stuff you find that doesn't belong to you.   

Jun 30, 2011 12:13 PM #17
Rainmaker
844,551
Lyn Sims
RE/MAX Suburban - Schaumburg IL Real Estate - Northwest Suburbs of Chicago - Schaumburg, IL
Schaumburg Homes

Excellent advice.   There was someone here that suggested getting your free report from each company free every 4 months on a rotation basis.  That way you get to keep your credit under watch thruout the year.

Jun 30, 2011 12:59 PM #18
Rainmaker
453,505
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Richie - Thanks for the comments and I hope you enjoy the book.

Gene - Glad to offer what I've discovered.

David - Feel free to pass the info along to anyone who needs it.

Ron - I agree.

Lyn - Yes, checking the 3 credit reporting agencies on a rotating basis allows you to keep better informed on your credit without paying for the info.  Good advice.

Jun 30, 2011 04:48 PM #19
Post a Comment
Spam prevention
Show All Comments
Rainmaker
453,505

John Mulkey

Housing Guru
Ask me a question
*
*
*
Spam prevention