Question: Can I raise
my credit from 608 to 690 in five months?
The
general answer is yes, but it depends…
To do this, it would be helpful for you to have a general idea of how credit scores are calculated. The different aspects of your credit history and performance are weighted to different extents—in other words, different parts of your history have different effects on your score.
First, of course, is your payment record. This makes up about 35% of your score. You generally can’t change a derogatory entry, like a late payment, if it has been correctly reported—but if a department store reported a late payment and there’s a good explanation for it, they will often remove that black mark on request. I’ve had occasions where a client had accepted a department store credit card, used it once, but didn’t get the bill (or overlooked it). Boom: late payment. The client calls the department store, mentions what a good customer they are, and the store reports “paid as agreed” to the credit bureaus. All you have to do is ask—and there is no downside to doing this.
If you have payments that are currently delinquent, bringing them current will raise your score immediately.
If you have any collection accounts on your report, paying them off may or may not be a good idea. The older an entry is, the less effect it has on your score. If that collection account is, say, four years old, changing its status from an old collection to a current paid collection makes it more recent—and your score could go down if you’re not careful. It’s best to take care of other, lower risk items before tackling older collection accounts.
Revolving credit (credit cards) can have a significant effect on your score, even when those accounts have always been current. Once your outstanding balance gets over 30% of the credit line, it’ll start pulling your score down. Paying revolving accounts below 30% will give your score an immediate boost. Revolving balances are weighted 30% of your score—almost as much as derogatory entries.
If there are incorrectly reported items on your credit report, you can dispute them. It’s easy to do online, by going to each of the three bureaus (Equifax, Experian, and TransUnion). If a creditor that does not respond to the bureaus’ request for confirmation within 30 days, the bureau will remove that derogatory entry.
There is a normal reporting cycle for creditors, so the effect of paying down credit cards may take a couple of months to show up. If you are working with a loan officer, though, he or she can do a “rapid rescore” by providing documentation confirming lower balances, paid collections, etc. to the bureaus. The new scores are typically available within a week or so.
Call a reputable lender with any specific questions about your scores or how to meet your real estate goals.
Good luck!
To do this, it would be helpful for you to have a general idea of how credit scores are calculated. The different aspects of your credit history and performance are weighted to different extents—in other words, different parts of your history have different effects on your score.
First, of course, is your payment record. This makes up about 35% of your score. You generally can’t change a derogatory entry, like a late payment, if it has been correctly reported—but if a department store reported a late payment and there’s a good explanation for it, they will often remove that black mark on request. I’ve had occasions where a client had accepted a department store credit card, used it once, but didn’t get the bill (or overlooked it). Boom: late payment. The client calls the department store, mentions what a good customer they are, and the store reports “paid as agreed” to the credit bureaus. All you have to do is ask—and there is no downside to doing this.
If you have payments that are currently delinquent, bringing them current will raise your score immediately.
If you have any collection accounts on your report, paying them off may or may not be a good idea. The older an entry is, the less effect it has on your score. If that collection account is, say, four years old, changing its status from an old collection to a current paid collection makes it more recent—and your score could go down if you’re not careful. It’s best to take care of other, lower risk items before tackling older collection accounts.
Revolving credit (credit cards) can have a significant effect on your score, even when those accounts have always been current. Once your outstanding balance gets over 30% of the credit line, it’ll start pulling your score down. Paying revolving accounts below 30% will give your score an immediate boost. Revolving balances are weighted 30% of your score—almost as much as derogatory entries.
If there are incorrectly reported items on your credit report, you can dispute them. It’s easy to do online, by going to each of the three bureaus (Equifax, Experian, and TransUnion). If a creditor that does not respond to the bureaus’ request for confirmation within 30 days, the bureau will remove that derogatory entry.
There is a normal reporting cycle for creditors, so the effect of paying down credit cards may take a couple of months to show up. If you are working with a loan officer, though, he or she can do a “rapid rescore” by providing documentation confirming lower balances, paid collections, etc. to the bureaus. The new scores are typically available within a week or so.
Call a reputable lender with any specific questions about your scores or how to meet your real estate goals.
Good luck!
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