Credit Tips for 2008

I posted the previous blog entry, "Will FHA Require a 620 in '08?" on http://www.activerain.com/ and the first question I was asked by a reader was, "What tips can you give someone to improve your credit?"




Here are a few suggestions for future borrowers:

1. You need to start early, get a copy of your report, make sure all liabilities are reporting correctly. If not, contact your creditor.


2. Check balances against high credit limits. Make sure to obey the 1/3 rule--balances should not be more than 1/3 of the high credit limit. You may need to open up a new card; this is important.


3. Pay off or settle all open collections. After 24 months, they are not impacting your score, however, if the debt is resold, it will open up on your report as a new collection and therefore drop your score.


4. Get to your true score. Remove authorized users if you do not know them well and know their ability to pay on-time. If they are late, so are you. This is scheduled to change soon.


5. Watch student loans carefully. This can wreak havoc on your score if not monitored carefully. I often see errors that damage credit scores.


6. If you do not have credit lines, begin now and open up a new account, even if it's a secure card.


7. Of course it goes without saying be vigilant and pay your bills on-time. Especially automobile loans.



Don't wait until you decide to purchase a home. Act now!