Then and Now

Not so long ago, a credit score of 620 was OK; not great, maybe, but good enough to get you a decent loan almost anywhere without a penalty. By early 2008, that same loan would need a 680 score to qualify. Then in April, the qualifying score for that same loan jumped to 720 and then again to 740 in August.

Gone are the days when a score of 700 or higher would get a thumbs-up from credit lenders. Now, interest rate adjustments begin increasing when scores drop to 740, and every 20-point drop in your credit score after that adds another upward rate adjustment.

People who took pride in their credit scores in days gone by must either pay significantly higher interest rates now, or try to make quick changes to nudge their scores upward. What used to be a great credit score is now only fair. For those wanting to refinance their homes, what would have worked a year ago might not make much sense today.

Virtually anyone can increase their FICO scores. Here’s how:

1. Discover where things went wrong. You should know your credit score. If you don’t, get your scores from the three reporting bureaus. Analyze the three credit reports to look for errors that may be causing you problems.

2. Fix the mistakes. You can do it yourself, or, lenders sometimes offer their services to help applicants increase their scores when inaccuracies are found and you can prove the error.

3. Reduce percentages of credit limit used. Either pay down credit balances or increase your credit limits. Keep credit balances under 30 percent of your available limit. It is not uncommon for people to increase their credit scores 90 to 100 points by paying off one or two credit cards.

4. Park the debt. If one spouse has income that could qualify on their own, move accounts around and transfer some of the debt to the other spouse’s name.

5. Consider using a rapid rescore. A rapid rescore is the fast way to find out if your efforts to improve your credit score were successful or not. Your lender can help you. They will work with a rescoring company on your behalf. It will take around a week to get the results back, but it may get your loan going again. The bad news is, it can cost several hundred dollars to do.

Anyone contemplating a refinance or a new mortgage anytime within the next year or so should start working on getting the ideal credit score now.

Terry Price has been working in the credit repair field since 1994, and is an expert in guiding people through the credit repair maze. His book, “Credit Secrets Bible” is considered by many to be the definitive guide in showing people how to legally, quickly and easily repair their own credit reports. His students routinely raise their credit scores by 100 to 200 points by following his methods.

Terry’s book is written in an easy to understand format, with example after example to explain each step of the process Terry says that even a fifth grader could follow it with no problem.

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