740 Credit Score is the New 620
Back in the good old days, 620 was a decent credit score and would get you the "all clear" signal from your mortgage broker.
Within the last couple years, especially within the 6 months, anything under a 740 credit score is subject to higher interest rate adjustments.
Why have creditors gotten so strict? Lenders, like Freddie Mac and Fannie Mae, took major losses the last couple years.
Consequently, they are forced to redefine their risk.
In fact, America Express reported delinquencies on their credit card loans at 5.
01%, compared to 4.
18% back in the third quarter of 2007, when the credit crisis started.
Also, Home equity loan delinquencies set another record in the third quarter, rising to 4.
30%, from 4.
01% in the previous quarter.
This new level of delinquency or defaulting means creditors have to redefine who has "good credit" and who doesn't.
What can you do if you are on the cusp of qualifying? 1.
Find out what the problem is.
Get to know what is making up your credit score.
There could be one or two things that are costing you 50+ points.
Get your loan officer to run a credit analysis for you or call Lexington Law Firm, a credit restoration firm, which offers a free credit consultation, at 1-800-223-7615.
2.
Correct inaccuracies.
80% of all credit reports have inaccuracies.
It's worth your time to go through your credit report and find anything questionable.
It is also perfectly legal to dispute with the credit reporting agencies (credit bureaus) and ask them to remove a collection or delete a late payment.
3.
Pay down max out debts.
Pay down your credit cards to at least 30% of your credit limit (preferably to a zero balance).
Or you can do this by increasing the limit (but beware of inquiries on your credit report).
I've seen people increase their credit score by 90 points just by making payments on the "right" credit cards.
4.
Move debt around.
If a couple is trying to get a loan and the income of one of you can qualify, move the debt over the other party's accounts.
5.
Get a rapid rescore.
This is "rescoring" of your credit.
To be honest, these are just money makers for the credit bureaus, but they can be valuable if you are up against a mortgage deadline.
And do it only after you feel confident you've done all you can to positively impact your credit.
Now, more than ever, it is important to be vigilant with your credit and spending habits.
Within the last couple years, especially within the 6 months, anything under a 740 credit score is subject to higher interest rate adjustments.
Why have creditors gotten so strict? Lenders, like Freddie Mac and Fannie Mae, took major losses the last couple years.
Consequently, they are forced to redefine their risk.
In fact, America Express reported delinquencies on their credit card loans at 5.
01%, compared to 4.
18% back in the third quarter of 2007, when the credit crisis started.
Also, Home equity loan delinquencies set another record in the third quarter, rising to 4.
30%, from 4.
01% in the previous quarter.
This new level of delinquency or defaulting means creditors have to redefine who has "good credit" and who doesn't.
What can you do if you are on the cusp of qualifying? 1.
Find out what the problem is.
Get to know what is making up your credit score.
There could be one or two things that are costing you 50+ points.
Get your loan officer to run a credit analysis for you or call Lexington Law Firm, a credit restoration firm, which offers a free credit consultation, at 1-800-223-7615.
2.
Correct inaccuracies.
80% of all credit reports have inaccuracies.
It's worth your time to go through your credit report and find anything questionable.
It is also perfectly legal to dispute with the credit reporting agencies (credit bureaus) and ask them to remove a collection or delete a late payment.
3.
Pay down max out debts.
Pay down your credit cards to at least 30% of your credit limit (preferably to a zero balance).
Or you can do this by increasing the limit (but beware of inquiries on your credit report).
I've seen people increase their credit score by 90 points just by making payments on the "right" credit cards.
4.
Move debt around.
If a couple is trying to get a loan and the income of one of you can qualify, move the debt over the other party's accounts.
5.
Get a rapid rescore.
This is "rescoring" of your credit.
To be honest, these are just money makers for the credit bureaus, but they can be valuable if you are up against a mortgage deadline.
And do it only after you feel confident you've done all you can to positively impact your credit.
Now, more than ever, it is important to be vigilant with your credit and spending habits.