Friday, October 26, 2007

Three Simple Ways to Raise Your Credit Score

In these challenging times when credit requirements are being tightened up at all the major lending institutions, good credit is more important than ever for home buyers. Las Vegas mortgage lenders have all but eliminated 100% financing and those with 5% down need to have great credit scores to obtain financing. Below are three techniques for raising credit scores substantially within 30 to 60 days.

DEBT to CREDIT RATIO: Carrying the proper debt to credit ratio will boost your score faster than paying off your bills in full each month. If you have $10,000 in total unsecured revolving credit accounts and you're currently in debt $2500, then your debt to credit ratio is 25%. If you have $1000 in unsecured credit and you owe $500, then your debt to credit ratio is 50% and you will score lower even though you owe considerably less money!

So how can you bring your ratios down without selling everything you own? The answer sub prime merchandise cards. A sub-prime merchandise card is nothing more than a card attached to a line of credit which allows you to buy merchandise from a specific vendor. The merchandise (in most cases) will be purchased through a catalog or online mall. Here's how it works: the company approves anyone with a pulse (literally) and gives them a card for $2,500 to $12,500 with NO credit check and NO cosigner. However, the card is only good for merchandise through their website or catalogs and the consumer is required to put down a deposit on whatever they purchase. After the deposit is paid, the remaining balance is financed on the card. With a legitimate Sub-Prime Merchandise Card your credit line WILL be reported to at least one major credit bureau (or more).

This means if you get a $5,000 card and you finance $500, on your credit report it will look like any other credit card and will do three extremely important things for you. 1.) It will increase your current "High Credit Limit" by $5,000 almost overnight as the account "looks" like any other unsecured evolving account. 2.) By carrying a small outstanding balance it will positively impact your credit report by building and showing potential lenders your credit worthiness. 3.) With a good payment history you are virtually guaranteed to receive "legitimate" pre-approved credit offers in the future due to other lenders renting your name from the credit bureaus.

PIGGYBACKING: Piggybacking is easy, effective, and extremely fast. Almost every credit card or credit account will allow the primary account holder to add on (at a later date) what's known as an "Authorized User" or "Secondary Account Holder". In most cases, when this is done, the entire account history(retroactively) gets posted to the authorized users credit report regardless of their current age or credit history. This strategy is usually only used by parents and their children or between other relatives. In recent years, due to its' effectiveness, this technique has led individuals with excellent credit scores to "rent out" authorized user accounts on one or even multiple credit cards in return for a fee.

DISPUTING COLLECTIONS AND BAD DEBTS: Often collections and bad debts that appear on a credit report can be removed simply by disputing them. The collection company has 30 days to respond to a dispute and often never does. At that point the credit company is required to remove the item from the credit report thus raising the score.

To find out more about financing Las Vegas homes, please call us at 702-985-7654.