News |Views |Reviews

As the mortgage crisis deepened, the Federal Reserve announced buying mortgage bonds. As a result, the mortgage rates fell by more than three quarter percentage point. Today the average rate for a 30 year fixed rate mortgage stands at 5.2 percent. Very naturally it is attracting borrowers to refinance to lower the mortgage costs. In fact, this should be seen as correction for balancing the money supply over the short term and long term. It is difficult to guess the mortgage rates in the future.

There is a also a red line added to the mortgage market. The underwriting standards for new mortgages has gone tighter. Learning from the past, companies have drawn new standards to make sure the mortgage loans will not turn bad to the point of going for foreclosure. With the new standards in the credit market, it is very important to understand and maintain a  good credit score

The figure shows the savings for better credit score levels for a 30 year mortgage.

With good credit rating, You will save more for higher loans with longer payback period.

Looking at the savings above, you will certainly start working  for improving credit scores continually till you reach the top level.It is clear that higher credit score can get you a cheaper loan. How does one repair the poor credit score.

The first & foremost the root basics for repairing credit score depends on your expenes vs income:

Find ways to improve income while reducing expenses
Improve your skills, investment in improving skills pays off.
Improve efficiency in whatever you do to increase your earnings
Making conscious efforts to save money with better budgeting.

Only when you have built a frame of mind & a plan to improve your earnings, reducing expenses & saving money, these tips may help…

Payment History Tips

Pay your bills on time. Avoid delinquent payments and collections can have a major negative impact on your  credit score.
Do not miss payment dates, get current and stay current.
A longer history of paying your bills on time will improve your credit score.
Paying off a collection account will not remove it from your credit report.
It will stay on your report for seven years.

Amounts Owed Tips

Keep balances low on credit cards & other “revolving credit”.
High outstanding debt to income ratio can lower credit score.
Pay off debt rather than moving it around.
The most effective way to improve your credit score in this area is by paying down your revolving credit.

Don’t open a number of new credit cards that you don’t need, just to increase your available credit.This may actually lower your credit score.

Length of Credit History Tips

If you have been managing credit for a short time, don’t open many accounts too fast.
New accounts will have lower average account age, it can lower on your score.

New Credit Tips
Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.

It’s right to request & check your own credit report. This will not affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

Apply for and open new credit accounts only as needed.
Don’t open accounts just to have a better credit mix - it probably won’t raise your credit score. Instead concentrate on improving your income first.
Have credit cards - but manage them responsibly.
In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Remember, someone with no credit card history can be placed in higher risk than someone who has managed credit cards responsibly.

Popularity: 12% [?]