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Our credit reports are similar to like a movie. When we are watching a movie and hit pause, it freezes that frame at that exact moments and displays an image. What you see is what you get at that exact moment. Fast forward 20 seconds and the view can be entirely different. Because accounts are constantly changing, we can never truly know what our scores are at any given time. Account balances can change, new inquiries can report, collections can be filed and late payments can post. Credit reporting is not exactly real time which means that if you use a credit card today, the new balance will not be reflected until tomorrow. Thus, no two credit reports are exactly alike. As in a movie - actors can play a good or bad role.  In general, the following script can assist with your acting scores.

FICO credit scores range between 350 and 850. We prefer if you have at least 720 to obtain preferred rates though we can assist you with 500 FICO score with FHA financing. Most lenders require that you have at least 620. If you score is below than that but you have time to improve it, here are some tips you can employ:

1. 35 percent of your score is from your payment history. If you could only do one thing from this list - on time payment history is the key. Pay all your bills on time. One late payment can negatively affect your credit score. Creditors have to wait 30 days to report a consumer late to the credit bureaus. Never late on any account and no collections.  Also you can not have any current accounts that are marked “was 30 – 60 – 90 day late now current” All accounts need to have 100% perfect payment history. Should you have a late payment, get current as quickly as possible. The longer you pay your bills on time after having late payments, the more potential for your credit scores to improve.   
2. 30 percent of your score is from credit utilization or how much of your available credit you use. It is calculated by dividing current balance by the credit limit i.e. $500 balance on a credit card that has $1,000 limit = 50% utilization percentage. Thus, if a credit is improperly reporting a credit limit - this can cause a significant decrease to your credit score.
   

   A standard dispute containing verbiage similar to the following: 

   Please update my account #XXXX to reflect, the actual credit limit, your reporting of this account with my high credit can easily be perceived as fraud and an attempt to diminish my credit rating. This improper reporting has caused me denial for credit and has caused severe financial and emotional distress. I am sure that is not your intention, and appreciate your expeditious response..

3.  If you are maxed out on your credit cards - paying them down below 30 percent could mean a dramatic increase on your score. We can do a rapid recheck if you are on a strict timeline. 
4. 15 percent of your score is from the length of your credit history. The older the accounts, the more points for you. Do not close unused credit cards as a short-term strategy to raise your scores. If you are unhappy with them - wait until you've completed your home financing, then close them.
5. 10 percent of your score is from the amount of new credit you've received. Do not open several new credit cards you don't need to increase your available credit. This approval could actually backfire and actually lower your credit scores. 
6. 10 percent of your score is from having a "healthy" mix of of credit items. Refinance HELOC into mortgage will help because HELOCs are revolving credit lines and you will be penalized if you use more than 30% of it. Adding an installment loan to the mix will also help. The bureaus will score you higher if you have an open mortgage, 3 credit cards, 1 auto loan and a small amount of other open accounts.   
7. Review and fix mistakes - please review information from Consumer Protection Financial Bureau (CFPB) and Federal Trade Commission (FTC) on how to file a dispute and a sample dispute letter that you could use to file to the credit bureaus and explain why you think a listing is in error and include any documentation to back up your claim. You may also start the process online with Transunion, Experian and Equifax.  The creditor must acknowledge within 30 days that they have received your complaint. The creditor should then resolve the dispute within 2 billing cycles, or less than 90 days . The creditor should also explain any actions they took to correct the error, or explain why they believe there was no error. Be forewarned that once you start the dispute process - it must be resolved with each credit bureau. We cannot use credit report with "Account in Dispute" status in it.  Contact us for free consultation. Here's a sample of a credit report and how to analyze the content. 
8. Make at least minimum payment and set up automatic bill payment. Making partial payment less than minimum amount due counts as late payment. 
9. Have five to seven bank credit cards with balances around five percent of the high credit limit, not zero, although some of the perfect credit scores had accounts that were zero. In addition, you need to have the every other credit card with at least five to ten years of history. No new account less than five years old.  No credit card, auto loan or mortgage of any type less than five years old.  Also you cannot have any hard inquiries in the last two years. A hard inquiry is when you apply for credit. A soft inquiry is when a consumer checks their credit for their own information. Create a budget. The number one reason people get into trouble with paying their bills on time is because of lack of money management. Carefully go over your income and expenses and find ways to cut down your monthly outlay. Excess funds should be used to pay down existing debts. Thus, will result in lower credit utilization (as mentioned above).
10. Consumers need at least one bank credit card that is thirty years old or older. A thirty year old history with no late dates ever on that account.  That is a key anchor for a perfect FICO score. In a short term - you can open a checking account that is linked to your credit card. Adding a new credit and positive payment history will help your FICO score.
11. Be careful about applying for new credit especially store/departmental credit such as Macy's, Fred Meyer etc. Store cards will not give you as many points as a bank credit card (even with just 1 store credit). Any time you apply for new credit, an inquiry is placed on your credit report. The scoring model does not favor excessive inquiries. Shop from multiple lenders within 30-day period for mortgage and auto loans as all inquiries within that 30-day time frame counts as one inquiry. All inquiries stay on your credit report for up to two years. You should limit inquiries to 7 per year.
12. Setup automatic bill pay for fixed payment accounts such as mortgage and utility bills to avoid late or miss payments (if you are not good at monitoring your accounts).
13. Consolidate student loans. If student loans are in default, they can be consolidated and transferred to the U.S. Department of Education. This will help tremendously.
14. Stop applying for new credit a year before applying for financing.
15. Here are more tips on how to keep your credit scores high. 
    

Our credit vendor - Advantage Credit offers Wayfinder in analyzing and providing recommendations on how to improve your credit score based on your current credit profile.

Please contact National Foundation for Consumer Credit or 1-800-388-2227 for information on debt management.