Pearland Texas Real Estate : Steps to Repair Your Credit Score

Steps to Repair Your Credit Score

credit report

Many times I come across people who would like to buy a home but are impeded by their credit score.  Unfortunately, this is all to often an occurrence. 

Recently, I interviewed Aaron Faubion, a financial industry expert and president of Allied Credit  Solutions. Allied Credit Solutions specializes specializes in repairing credit scores. Faubion says that there are several things you can do on your own to help repair and improve your credit score. These are great tips and I'm planning on passing this on to all of my clients! I also wanted to include this for my readers. I know I learned a lot and I hope you do too!

Things You Can Do On Your Own To Improve and Maintain Your Credit:

  • Keep all balances on credit cards under 35% of their limit: By keeping your balance to limit ratios down this will impact your scores significantly, showing proper utilization of credit.
  • Instead of closing accounts, keep them open: You want to show they you are maintain your credit and the accounts you keep. Most people will close accounts when you have paid them off. This isn't always the best idea. By keeping accounts open (even though they're paid) will show creditors that you have been extended credit in the past and know how to use the credit you have been given.
  • Keep the inquiries into your credit down: You don’t want to have your credit looked at all the time. So keep your credit inquiries down. Only apply for what you think you will be approved for. If you have to many inquiries, a creditor wanting to extend you credit may not extend to you that credit due to the fact of the unknown. A creditor looks at this 2 ways. One, being that you have applied for credit and for some reason we denied. The 2nd being that you applied for credit and may have got extended credit, Therefore, the creditor doesn’t want to get you over extended.
  • Pay all your monthly obligations ON TIME: The number one thing that gets people into trouble is the mind thought " oh, if I'm late only one time it won't hurt my credit that bad." THIS IS ABSOLUTELY FALSE. 1 single late pay can seriously hurt your credit score. One late payment can hurt someone's score by over 75 points.
  • Don’t pay off all of your debt at one time: Creditors don’t like this and your credit score doesn’t either. Paying all of your debt off at once, kind of shocks the system per say
  • Pay off your accounts over a period of time (usually 4-6 months). When you pay off your account / or accounts all at once, the credit scoring system doesn’t know what happened to all of the debt. The scoring system doesn’t know if the debt was replaced by new debt and just not reporting to the bureaus yet or if the debt was transferred to a current outstanding debt, etc. So what will happen is the credit score will drop drastically, for a few months in order to see where if at all the debt went.

 

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Comment balloon 3 commentsMaggie McFarland • January 24 2011 03:50PM

Comments

Great blog that all buyer's need to read! I'm going to re-blog. Thank you!!

Posted by Anthony C. Palacino (eGreen Realty) over 8 years ago

I'm so glad you enjoyed it! Please do pass it on!  I know I never knew that it was recommended that one should keep their credit card balances at 35% - I bet there's a lot more out there who don't know half of these tips!

Posted by Maggie McFarland, Pearland Realtor, Homes for Sale in Pearland Texas (RE/MAX Pearland - Maggie McFarland) over 8 years ago

Hi Maggie, Good info - thanks for sharing it!  I didn't know about the 35% either.

Posted by Joyce Godwin, Realtor, CRS, RE/MAX Elite Properties (RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston) over 8 years ago

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