My credit is about 650 and next year i want to refinance home?
Answers:
Sorry to say, but increasing your credit 100 points in one year of time is going to be very difficult to accomplish. If you had another credit card it might help a little bit, but only if you use it a little bit each month and pay the entire card off each month. Try to limit your revolving accounts as well. Make sure the money you are borrowing on cards is less than 30% of your borrowing power (limits). You also need to have a long term standing with your bank.
For every 20 points you raise your credit score you'll benefit from a better mortgage rate. 640, 660, 680, 700 are all marks to try and achieve.
Good luck, you are going to need it. Unfortunately some of your goal is out of your hands.
I'd make sure that you have some sort of monitoring on your credit report so that you don't get any dings or identity thefts. Go to CanYouCheck.com and click on the link for Life Lock. This program can really help you and works with the Credit Bureau's.
Don't get any other cards. In fact go ahead and finish paying for that loan and pay off or pay down your credit card but don't close it, then don't run your credit anymore for a few month's. That should boost you over 700's
One credit card that is payed off each month, not where you carry a credit balance, but where you pay it off each month in full, before any interest can be added, is more then enough to bring your credit score up to 750. I know, I had no real credit and was able to bring mine up higher then that in one year, by simply charging things, then going home after the charge was made and transfering the funds from checking to cover the charge in advance. I upped my credit score 254 points in one year by doing that. It's the use of the credit card that builds a record as well as paying the charge off in full either the same day or before it comes do and earns any interest that ups your credit score fast.
Getting ahead on your current mortege would also make you more likely to qualify to refinance your home.
Mortgage lenders have programs that start from 680 and above, 620 and 680, and then 620 and below. Once you have gone beyond 680, the interest rates are the same regardless if you have 750 or 800. You really need to concentrate to bring it up higher than 650. Right now you are in an area lenders call Alt-A. A=Prime. My suggestion to you is that your small loan which is probably a Installment loan for credit purposes, you should have paid down to below 50% of the original loan amount, also, your credit card should be below the 50% mark, the magic number should be at 20% of your maximum credit limit. If you do that, your score should go up by 40-50 point with no problem. Factors that determine your credit worthiness include, History( how long you've had that credit line), High Balance, How much of the credit you do have are you using, derogatory, etc. You can increase by 50-100 points in one year, with proper credit usage. Always keep your credit cards below 50% maximum limit, and when you first obtain an installment loan your score will drop, but once you've paid down some, say, 20% of original loan amount, then you will see a positive impact on your credit worthiness. Good luck hope this helps! When your ready to refinance, look me up!
stop to get other credit cards. only spend the money you have.
open a savings account or an IRA and start to save.
Suppose the value of your home is nearly $110,000. The outstanding debt is $86,000, and you want $8,000 in cash to repay two small loans with high interest and want to carry out a small home improvement project. Your credit rating is unsatisfactory, so banks are reluctant to lend you 100% or even 95% equity, so an equity line is useless.
Do not apply for a new credit card, pay all your bills on time and pay your credit card bill in full every month. After one year the only thing that will be against your score will be what ever problems you have had in the past. If you have had late payments in the past three to five years they will show up on your credit report. The credit report will also look at your debit to income ratio so if you pay off that loan this fall then that will improve this ratio. Here is a simple rule to live by: except for a car payment and house payment if you can't afford to pay cash for it then you can't afford it.
It's a good project. But before getting the loan, you should know tips how to shop for a mortgage. Mortgages come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture.
Once you decide on the mortgage you want, do your homework. Different lenders offer different rates, points, and fees. Ask around and compare. Find brokers who operate in your area. Brokers represent hundreds of banks, agencies and or investors. This allows them to obtain the lowest possible rates for their customers.
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