Improving your credit to go onto home ownership. Tips about credit for improving your credit so you can benefit from rent to own home programs.

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April Newsletter

At Last The 12 Month System To a 720 Credit Score

Presented by
Lori
EZQualDreamHomes.com and Swiftcurrent Investment Group

If you are just joining my newsletter group...Welcome. You can always go online to EZQUalDreamhomes.com and then click on Current Tenant Info then go to the previous newsletters.

So, let’s get started. This past week in the Gazette Newspaper(Sunday 4/12/2009) there was an interesting article from the Associated Press. The article was titled “Credit Scores Don’t Care for Themselves”.

Basically this stated just because you are responsible with your money the scores do not automatically follow. There is a system to the credit scores and you have to learn what the rules are so that your credit score reflects your financial responsibility so that if you every wanted to access credit you would have options and be able to borrow money for purchases such as a home.
So, although paying cash and saving money is wise it can negatively affect your credit if you stop using your credit, or do not use it correctly. It is important to understand credit and use it just enough to keep your scores in a good range. And that range has increased. It used to be 650 was a pretty good credit score and now 700-720 is the pretty good score.

It went on to give some helpful tips:

	The fastest way to boost your credit score is pay down credit card debt. That gives you the biggest bang for your buck!
	If a lender wants to lower your limit you may be able to round up some credit card offers and give your business to another company and tell your current credit card company that you will go elsewhere. This is important because when they lower your credit amount it can bring down your score because your utilization rate (from last month) goes up and makes it appear that you over used your credit.
	Then the biggest mistake a lot of folks make with credit is skipping a payment. Once you do that it drops your score down and until you show that you make at least 3 on time payments (that’s 3 months) will your score start to increase. You really need to make sure that every one of your bills is getting paid on time each and every month.

Okay, onto this month’s topic- Credit Cards. You are now well aware of what a FICO score is and why it is so important. We have reviewed the 5 most important factors that are considered in the credit score formulas are:

	Your payment history
	The amount of money that you owe
	The length of time you have had credit
	The type of credit that you have
	How many credit Inquires

I thoroughly went through what your payment history involves and that it is very important that we change your history now… You want your scores to reflect a positive payment history; that you make your payments and you make them on time. Next we reviewed utilization rate where you should only be spending around 30% of your available credit in order to bring your scores up.

Today we are going to talk about the types of credit cards the how and why you need to use them.

Did you know that credit bureaus award higher scores to people with at least three revolving credit card accounts?

MasterCard®, Visa®, Discovery® and American Express® are specifically revolving credit, where you have a credit line and you use some of it and pay it down and it goes back and forth. Please note that an ATM card or debit card is not a credit card even though it has a MasterCard® or Visa® logo. They are plastic checks for your convenience only.

If you do not have at least 3 active credit cards the credit bureaus do not have enough information to analyze your spending and payment habits. You need to open 3 accounts and keep them current in order to increase your FICO score. If you have more than 3 accounts do not close them, the damage has been done and your scores will actually decrease if you close credit card accounts.

If you have fewer than 3 credit cards than you do want to open new credit card accounts but you want to apply for cards that meet your needs. For instance you may want low interest rates, or fixed interest rates or credit cards for borrowers with bad credit or maybe even prepaid credit cards. You do not want to just apply for a bunch of credit cards and see what you get.

That will hurt your scores with multiple inquiries. You want to make sure it is credit that you can afford and that you meet their acceptance criteria. In other words find out if you will qualify before you fill out and send in the application.

Just because you get a pre-approval letter in the mail it does not mean you are approved. It is a waste for you to have them pull your credit if you do not meet their qualifications in the first place.
Instead, just call their service department and ask what you need to qualify. If you meet their specifications then you should go ahead and apply.

Most low interest rate cards have an annual fee and the ones with no annual fee will have a higher interest rate. Usually an annual fee works in your favor unless you are paying the card off each month, and then the higher interest rate would be fine.

If you have more than 3 credit cards you are more likely to get yourself into trouble. At least this is what the credit bureaus think. They consider you to be more of a risk if you have more than 3 revolving credit accounts. Credit card experts agree that once you have opened more than 3 credit card accounts the damage has already been done. If you close them it will actually hurt your credit more so just leave them open and manage them responsibly. Don’t worry if you have more than 3, just don’t close any and use them cautiously and always pay the payments on time.

Your goal is to make the credit bureaus see you as a responsible manager of your credit. They want to see that you can have more than one account of revolving credit and pay it on time and the correct amount. For doing this they award more points and you will see your FICO scores increase.

Make sure you pay your credit card bill on time every time. This will increase your scores pretty quickly. It is crucial that you do not miss a payment or even be late on a payment. You also want to make sure the credit card company reports your payments to all three of the credit bureaus so that you’re score improves. You also want to make sure you keep old accounts active. The longer you have an account active the better payment history you will have and that also increases your scores.

Always follow the utilization rate that we discussed in last month’s newsletter. Thirty percent (30%) is the best place to keep yourself. Remember this means that you want to always stay at or below 30% of your available credit. (To further remind you of this let’s take the example where you have $1000 credit available on Visa® then your goral should be to always use only about $300 of it so that you are constantly around 30% utilization rate. This will bring your scores up a bit more and faster).

Something that may help you organize your payment schedule is to have automatic payments on a certain day of the month that is before the due date to help you plan out your finances and ensure you do not miss a payment or have a late payment.

Okay…you got one more bit of knowledge to work with and improve your credit scores and get you closer to financing your home. Your diligence and persistence will pay off with unlimited availability of great interest rates when your scores go up!
Don’t forget I encourage everyone to go to the First Time Homebuyers Class offered to anyone for free.
This program is put on by Partners in Housing and you can find their schedule at: http://www.torebuildcredit.com/docs/partners_in_housing_class_schedule.pdf

Don’t forget if you have questions or need some assistance with improving your credit call your finance specialist first and if you need more assistance they will contact me if there is anything that I can do. Your finance specialist can get credit issues solved faster than I can, but I am happy to assist you in any way.

Dedicated to improving your credit and making you a home owner,
Lori
Swiftcurrent Investment Group, LLC
EZQualDreamHomes.com
719-648-5223

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