What is the best way to increase my credit score from 580 to 620.?

Question

I have 50,000 in student loans that have been in forberance. I have 2000 in old credit card debt and have a credit card in good standing for two years. I have 10,000 saved and would like to be efficient in raising my score, so I can get property in a year. What is more effective to raise the score by 40 points.

Answer 1

You are actually in a good position to purchase property with what you have discribed. I have financed worse when I was in real estate finance. According to the loan program you select your rate may not be the absolute best but that can be adjusted with a refinance later.

Now is an excellent time to purchase property if you can... in a year property values will have increased and we never really know what to expect with interest rates.

For certain, however, to prepare for any purchase of property within a 6 month window...

1. Don't make any other large purchases with payments (e. g., cars, boats)

2. Leave as much money in a savings account as you can... untouched.

3. If not on direct deposit - Always deposit your entire pay checks and draw down to may payments on bills, etc. This will show a strong history of cash flow and good accounting practices.

4. Don't make any unusually large deposits without a good logical explanation... the same with withdrawals.

5. Don't move money between accounts without strong purposes.

6. Keep current on all current credit payments.

Even a relationship will play a large factor in financing property. Even if your "significant other" or spouse does not go onto the loan... their spending habits can be questioned and considered in determining your creditworthiness.

Good Luck, keep up the good habits, and HAPPY HOLIDAYS!

Answer 2

Credit scores run from 350 to 850. I've been in lending about 10 years and I think the highest score I've seen is about 830. The lowest I can remember is around 400. Your scores are excellent. Whatever you're doing now, you're doing right. If you look at your credit report, you'll see some "factors" that affect your credit. Some of the seem very contrived to me. Certain types of credit are better than others, with finance companies being toward the bottom of the heap. Most people would be more than happy with your scores.

Answer 3

I am not sure why you are in forbearance with your loans and have $10k saved? The reason for forbearance is for people who cannot afford to pay their student loan payments. How long has the $2k cc been negative? The longer it has been on your credit report, the less and less it has a negative impact. Pay off your entire cc bill. You need to have ZERO cc debt prior to buying a house. However, a 620 score will get you a terrible interest rate. Check out what a 620 score can get you on http://www.myfico.com/. Obviously the only other thing that can improve your score is time and making sure bills are paid on time.

Answer 4

As crazy as it sounds, CLOSING a credit card account will reduce your credit score. Pay the card off, cut up the card, but leave the account open. Your score will go up alot if you do that. You'll get to 620 easily.

Answer 5

First Payoff credit cards, then any other high interest bearing accounts. Then if you have some money left over take care of that student loan.
What lenders are looking for is the proportion of outstanding balances over credit limit.

Rule of thumb: The less you owe the easier it will be for you to borrow money.

... mortgage adviser

Answer 6

1. Always pay on time or ahead of time.
2. maintain low balances on credit cards
3. keep your total potential debt to earnings load low - If you have a card with a $15000 credit line, you may ask them to reduce it to something more realistic, like $5000.
4. I was told by an underwriter that having just two cards, a major credit card (VISA, MC) and a consumer card (Sears, best buy, etc...) is the best mix for revolving credit.
5. You should have a recent history of both installment or term (Car or house loans) and revolving credit.

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http://www.bestcreditrates.net

Answer 7

Pay down your balances, pay off old debts and continue to pay on time. The credit score values long-standing accounts, so do not open any new accounts unless absolutely necessary.

Answer 8

i can't believe you're at 580.