How can I increase my credit score from 435 to 720 in two years?

Question

I have 5 outstanding collections. ranging from $600 to 4000 ($649,760,1074,1124,3114) and a student loan that doesn't hit till 2012. I am expecting my first child, a juinor in college and want to buy I home soon. I think two years should be enought time to get ready. I looking for resources (people to talk to to get my credit report in shape and what I should be doing to prepare)

Answer 1

I have been in mortgage lending for several years and have seen this sort of thing many times.

The very first step you need to take is paying off those collections. Contact each one of the creditors, or maybe just one at a time and once you get the first one paid off, call the next. Ask if they will settle the account for less than what the collection amount is for, a lot of times they will just to get it out of their hair. Either way, set up some sort of payment arrangements and make sure to pay with money orders, cashier's checks, or a personal check so you have proof of payment. This can prove to be very helpful if the collection status is not updated on your credit report in a timely manner.

You will really be surprised at what paying off these collections will do for your credit. In addition, being in college and having a baby means that times are inevitably tight. If money is really tight and you have to decide on paying your electric bill or credit card late, always go with the company that doesn't report to a credit bureau. Generally, electric, gas, trash, water, etc. do not report on your credit bureau.

It will be SOOOOO important in the next two years to make the effort to get those debts paid and not have any new late payments on your credit. This will be viewed favorably by your lender. If at all possible, put a few dollars aside each month in an account that you do not touch at all. Even if it is only $10 a month, this shows that are are capable of budgeting, saving, and not touching it.

Good luck!

Answer 2

1. DO NOT USE A CREDIT CONSULING/CONSOLIDATION AGENCY. They will kick you while you are down, and rip you off. They will take your money, and they will not do ANYTHING you cant do yourself.

2. You wont get your score form 435 to 720 in 2 years. Even if you payoff everything today, it wont be that high in 2 years.... but that does not mean you cant get an FHA loan with decent rates in 2 years with no past due accounts.

3. Start paying stuff off. Save up 50% of the balances, call up the collection agency, and offer them the 50% as payment in FULL. Get any agreements in writing, and do not give them permission to draft your checking account.

4. Make all your payments ON TIME, every time.

Answer 3

Paying off the credit card early would be better. These are two different types of credit, and they have different effects on your credit score. The car loan is installment credit, which means it has a balance that will be paid off over time with no new additions to it. A credit card is revolving credit, which means you can make a payment and charge it right back up again all in the same month. For this reason, it is far better to pay off the credit card. Perhaps the best strategy would be to pay off the credit card in full and to pay off perhaps half of the car loan to save on interest, then continue to make the balance of the installment payments over time to build a solid credit history. Paying off an installment loan immediately does not build a better credit history.

Answer 4

The 5 items in collections will remain on your report for 7 years after the last transaction, so although you can raise your score do not think you can get to 720 in two years. Question. School loans usually become due, or I should state payments start becoming due 6 months after leaving college.

Answer 5

You will need to pay off those accounts and, for the next two years, pay everything on time. Don't even be one day late. No more waiting until the due date to mail the check. When you get the bill, cut the check and mail it pay it online.

The score will rise. It may rise rather quickly at first and then slow down.

Answer 6

To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your scoreyou still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs.

Answer 7

1) pay your bills ontime & don't use them
2) pay the minimum on all except for 1 where you ladder the difference on that in cc
3) reassess your finances & your expenses
4) increase your income
5) improve your debt-to-income ratio
6) live within your means
good luck
i've done it & increase it from 525 to 677 in 15 months but my situation was different from yours.

Answer 8

It's easier for you to read these 7 fast fixes for your credit score than for me to say it.

http://articles.moneycentral.msn.com/Banking/YourCreditRating/7FastFixesForYourCreditScore.aspx

But watchout for Credit Counseling schemes!

http://articles.moneycentral.msn.com/Banking/YourCreditRating/TheConsumersGuideToCreditCounseling.aspx

And finally, weird stuff that hurts your credit:
http://articles.moneycentral.msn.com/Banking/YourCreditRating/WeirdStuffThatHurtsYourCredit.aspx

Happy score raising!

Answer 9

I'm interested in this

Answer 10

Pay off the outstanding items.

Pay all your future debts on time every time.