Is Your Credit Score Preventing You From Getting A Fort Lauderdale Mortgage?

Today’s tougher lending environment includes the necessity to have a higher credit score as well.  If you want to qualify for a Florida home loan it is necessary to have a minimum mortgage credit score of 620.  Home buyers that are still plagued by past credit problems need a plan to boost their credit score.

There are many myths about how to best handle the negative impact past credit problems may have had on your credit score.  As a Fort Lauderdale mortgage broker, I encounter many home buyers trying to qualify for a Florida home loan, only to discover past credit issues have resulted in a credit score below 620. 

Here are “Seven Tips” to help raise your credit score quickly:

1. Evaluate Your Collection Accounts – You probably didn’t realize that paying off a collection account can actually lower your credit score.  That’s because the credit score software evaluates based on most recent activity date.  When you send in a payment to payoff a collection it’s reported reflecting the payoff date as a “paid collection”.  Since credit score software reflects the date of last activity, it sees the payoff as recent collection activity and it actually can lower your score. What’s the best way to deal with a collection to maximize your score?  Contact the collection agency and explain you are willing to pay off the collection under the condition that all reporting is withdrawn from the credit bureaus.  Make sure you request a letter in writing confirming your agreement.  Not all collection agencies will remove references to the collection account, but many will.  It’s worth the effort as this can dramatically improve your credit score.
2. Payoff Your Past Due Accounts – Any past due amounts over 30 days being reported to your credit report will negatively impact your credit score.  Accounts that slip to 60 or 90 dates past due will really hammer your credit score.  Bring all past due accounts current.
3. Try To Eliminate Your Late Payments – If you’ve received a few minor 30 day late payments, you can call your creditor and request them to remove the late payment from your credit report.  Remind them that you’ve been a good customer and would appreciate their assistance with a one time courtesy adjustment.  Most of these calls are taken by call center representives. Be persistant, but remain polite and express your appreciation for their assistance.  If you don’t have results, hang up and call back and try with another representative.  Don’t be afraid to ask for a Supervisor and for the best results, always remember to be courteous.
4. Eliminate Your Liens And Charge-offs – Liens and charge-offs that are older than two years will not impact your credit score.  However, liens and Charge-offs within the last two years will seriously damage your credit score.  In this case, paying the past due balance is very important.  In fact, if you have limited funds to work with, then pay off past due balances first and the collections afterwards.
5. Evaluate Your Credit Balances And Limits – Balances over 70% of your available limit will do the most severe damage to your credit score.  The next evaluation point is at 50% with 30% or less being your optimum level.  You can either pay down your balances or redistribute the balances over several cards to minimize damage.
6. Don’t Close A Credit Card Account -  Even if you don’t have a use for the card any more, don’t close it out.  Your credit history and length of having credit will impact your credit score.  Closing a credit card account you payoff will eliminate how the software evaluates how long you’ve had a piece of credit and will actually lower your credit score.

As a professional Fort Lauderdale mortgage broker and a Certified Mortgage Planning Specialist (CMPS), I’m uniquely qualified to assist you evaluate your credit score and help plan the best steps to improving it.  Become  home buyers by contacting:

 Harvey Collier – First Trust Mortgage – 954-629-6151