Tips for Raising Your Credit Score

I promised on the radio program today I would post this information. It is courtesy of Zillow's "wiki." With all the transition going on in the mortgage industry and the economy, it is more important than ever to have the highest possible credit score you can. If you are looking to increase your score a bit, here are a few ideas.

Your credit score, sometimes referred to as FICO score, is calculated by a system of scorecards. Scores range from 300-900. Your score is based on your credit history, both bad and good. Scores are generated by computer and no human element affects the outcome. Credit scores are designed to predict if the borrower will end up with a 90-day late in the next four months. Credit scores do not use race, color, religion, sex, national origin, marital status, or age as predictive characteristics. Occupation and income are not taken into account on your credit report.

FICO scores consist of the following:

35% of the score is based on payment history. Recent late payments count against you more than a late payment that occurred 2 years ago. Frequency and severity of "lates" are considered as well. A 90-day late is obviously worse than a 30-day late.
30% of the score is based upon the balances of revolving credit cards, not installment accounts. If your balance is over 50% of your limit, you are penalized. Your score will be higher if you have very small balances on your accounts instead of zero balances.
15% of the score is based on your credit history. The age of your oldest credit line and the number of new lines are considered. It is best to have 4-6 open credit lines and the longer you have had them the better.
10% of the score considers the type of credit you have. Finance company installment accounts are negative (e.g., the furniture store that advertises buy now and make no payments until 2009).
10% of the score is affected by the number of inquiries on your credit report. Each time you give someone permission to pull your credit, it shows as an inquiry. 5-7 inquiries are allowed per year without affecting your score. After that, each inquiry will cost you 5-15 points. When you are shopping for a car or a home, you are allowed multiple inquiries within a one-month period. If you purchase a car or home, these inquiries do not affect your score. If you do not make the purchase, they will count against you, because it appears to the computer program that you were denied financing.

Hints:

• Maintain 4 to 6 major credit cards.
  


• Keep your balance on each card 50% or less of the available limit.
  


• Avoid opening and transferring your balances repeatedly to new cards. This “Credit Surfing” will affect your credit grade negatively.
  


• When consolidating credit cards, do not transfer more than 50% of the available limit to the new credit card.
  


• Refrain from having numerous requests about your credit for at least 6 months prior to purchasing or refinancing your home.
  


• Check your credit report to confirm that all accounts included in the BK are reported as such and not as collection, charge-off, or “late pay” accounts.
  


• Revolving credit (credit, department stores, etc.) weighs heavier on your credit score than installment debt (car loan, furniture, etc.)
  


• Pay down revolving debt to increase credit score and make your payments on time.
  Finance companies have a negative effect on your score.
  


• Do not “shop” for personal loans at these types of companies, as each inquiry will lower your score.
  


• An inquiry from a mortgage company does not have a negative effect as they are coded differently.
  


• Buy your furniture, car, etc., after your home loan closes, not during escrow.
  


• If applying for a job that requires a credit check, request that the employer run an “Employer/ Employee Credit Report.” This will not impact your score as an inquiry.
  


• If you have any dispute about the information in your credit report, you have a simple process in which to challenge the errors.
  


• The Fair Credit Reporting Act supports you and guarantees responses in a timely manner.
  


• Check your credit report for duplicate information. Many times the same collection or debt is reported twice therefore lowering your score. Request that the credit bureaus remove all duplicate and erroneous information.

New Listing on Lake Robinson -- Greenville, South Carolina

The Hamilton & Co. Group of Keller Williams Realty has just listed a great new property on Lake Robinson near Greenville. It is located in the Waters Edge neighborhood on Bass Cove Drive. You can view more details about the property (including aerial photos) on the website we have created for the property here.





Please contact us for your private tour.

Things Other People Accomplished at Your (My) Age

I ran across an interesting website today that allows you to enter your age and see in a list what other people had accomplished at that same age. It could be encouraging or discouraging depending on your perspective. If you are 31 like I am, here is what a few others had done at our age:



At age 31:

• French Egyptologist Jean Francois Champollion deciphered the Rosetta stone.


• British physician Thomas Wedgwood produced the first photograph.


• Eli Terry produced clocks with interchangeable parts. He also introduced the free-trial, no-money-down sales method.


• Gregory Pincus achieved in-vitro fertilization of rabbits. Later he invented the birth control pill.


• Dennis Kucinich was the youngest person ever elected to lead a major American city (Cleveland).

Enter your age here and see what others have done.

Most Expensive Zip Codes

Forbes has the list. For some reason I don't see 29687...

Some interesting tidbits:

• 29482 (Sullivan's Island near Charleston) was tops in South Carolina at #70.
• Only three total from South Carolina in the top 500. All were in Charleston.
• 07620 was tops on the list...its in New Jersey
• 90210 didn't even make the top 10.

I think we'll talk about this on the radio show tomorrow on WMUU, 94.5 FM at 11:30 AM. Also on the program, Ben Leinster, a local real estate attorney, will be on the air to take your calls and talk to us about title insurance.

What is a Reverse Mortgage?

One of the topics most talked about by callers to my radio program is about reverse mortgages. There seems to be a lot of interest and misconceptions about this type of loan and I suspect as more and more baby boomers become eligible and realize they aren't going to make it through retirement on their savings and social security, there will be even more interest over the next few years.

So, what is a reverse mortgage and is a good idea for you or a loved one?

A Reverse Mortgage is a loan available to seniors over the age 62 allowing them access to their home equity on their primary residence in a lump sum or multiple payments. The obligation to pay the loan is deferred until the owner dies or when the home is sold. There are currently 36 million people over the age of 65 with a large majority owing their home free and clear. In 2008, the first wave of baby boomers will be eligible for reverse mortgages.


To qualify for a reverse mortgage, you must be at least 62 years old and own your own home. There must be enough equity in the house to pay off outstanding loan balances. The amount of money you can get will depend on how old you are at the time of closing, how much your home is worth, the total amount of liens, and current interest rates. You can receive the money in a lump sum, set up a line of credit, monthly payment, or all three. Since the money is not additional income, all funds from the reverse mortgage are tax-free. Closing costs are very similar to a “conventional” loan, and are paid by the borrower. Make sure to consult your mortgage broker for more information on fees. Counseling is provided and required on all reverse mortgages to ensure that the borrower understands how everything works.

It is important to note that reverse mortgages are non-recourse loans, which means a borrower can never owe more than what their house is worth at the time of repayment, commonly referred to as going upside down.

Currently reverse mortgages account for .5% of all mortgages, this expanding segment is definitely an area to keep an eye on.

For further reading from reliable sources, click here, here or here.

Six Steps to Avoiding Foreclosure

We talked about these steps today briefly on the radio program, My Greenville Home, on WMUU 94.5 FM in Greenville, South Carolina. We didn't get a chance to go into details because we ran out of time, so I thought I'd post the link for you to read it for yourself.

Just to recap, the six steps are:
1. Call your lender immediately.
2. Ask to speak to the "loss mitigation" department.
3. Have everything you need in front of you to discuss your financial situation with your lender.
4. Know the different ways your lender can help you.
5. Know where to turn if you are not getting help from your lender.
6. Be aware of the foreclosure process--and consequences.

Be sure to read the whole thing in the link above for more details.