Quickly Improve Credit Score

Six months is a short time to expect a large improvement in a credit score. It is possible to see a 150-point increase from a credit score of 530 in 12 months, but expecting a major turn-around in six months is too much to expect. Let us look at what goes into a credit score.

Credit Scores at a Glance

The three major credit reporting agencies -- Equifax, Experian and TransUnion -- each report consumer credit scores. Equifax and TransUnion base their credit scores on a FICO formula. FICO is developed by Fair, Isaac & Co. Experian relies on a formula it developed and calls the PLUS Score. The three credit reporting agencies also use VantageScore, a competing score technology to FICO and PLUS Score.

FICO, PLUS Score, and VantageScore are calculated using mathematical methods that incorporate credit history, amount of credit used and available, number of late and on-time payments, whether any payments due are in default, and other variables. The credit report lists specific accounts and financial history that go into the credit score. The proponents of FICO, PLUS Score, and VantageScore claim their scores are superior to the competition at predicting future consumer behavior. These claims are unsubstantiated because all three formulas are trade secrets and are impossible for third parties to test.

It is impossible for anyone other than the mathematicians at Fair Isaac, Experian, or VantageScore to tell you specifically when and how much your credit score will change based on you taking a certain action. I can give you a general idea based on my experience and observations, but nothing precise.

The most sure-fire way to raise a credit score it to pay all accounts on time. A second certain tactic is to reduce credit utilization. A third is to diversify the types of credit used, which the credit reporting agencies refer to as trade lines. Fourth, leave your oldest trade line open because it establishes a baseline for your credit history. Finally, credit reports are notoriously inaccurate. The Fair Credit Reporting Act (FCRA), a federal law, requires consumer credit reporting companies to report accurate information. If you find any inaccurate information in your credit report, you should dispute inaccurate derogatory notations.

Your Questions

There is no free manner to get a credit score. You may want to consider buying one of the services offered by the credit reporting agencies that offers customers real-time monitoring of their credit reports so that you can see for yourself when your score is high enough to qualify for a mortgage. There is no golden number for mortgages, but I would not recommend attempting to find a mortgage until your score was greater than 680.

Regarding disparate credit scores, this is a common occurrence. Mortgage lenders answer this question differently. Some will average the three. Others will throw out the lowest. Some ignore the highest. Some will pull a consumer's credit score from one credit reporting agency, and if it is above their threshold, they will not bother pulling the consumer's scores from the other two credit reporting agencies. Each mortgage lender has their own underwriting standards, which means that if you do not have a high enough score from one lender it pays to continue shopping.

You are in one of the rare situations in life where shopping is the solution to your problem. Do not stop if or when a lender tells you it will not fund you. Keep shopping, but with a wary eye for predatory lenders. Bills.com makes it easy to compare mortgage offers and different loan types. Visit the Bills.com Mortgage Refinance Savings Center to get no-cost quotes from up to five pre-screened lenders.

I hope the information I provided helps you Find. Learn. Save.

Best,

Bill

Bills.com