Improving credit SCORE

Improve your credit score, before you buy that home or car, follow these few easy steps and save thousands. your credit score is a very important number!
The interest rate you'll pay is determined by this number, a two points difference could cost you Thousands per year on your mortgage payments.

About FICO scores
Credit scores are called “FICO scores” credit bureau scores in America are produced from software developed by (Fair Isaac and Company) this scores are provided to lenders by credit reporting agencies. FICO scores ranges from 350-850 Lenders categorizes the Scores into varies groups

780 above = A+
720 - 779 = A-
680 - 719 = B
620 - 679 = C
550 - 619 = D
549 below = F

Savings Example

Higher FICO scores, get you lower mortgage rates, .
Example, a median priced property @ $200,000 on 30-year fixed mortgage.

FICO rates payments
760 - 850 6.00% $1,199
700 - 759 6.30% $1,238
680 - 699 6.50% $1,264
660 - 679 6.80% $1,303
640 - 659 7.30% $1,371
620 - 639 8.00% $1,468

Now, you see that FICO Score can makes such a big difference, below some suggestions, tips on how to fine tune your Credit FICO Score before you apply for that loan.

Improving your Credit FICO Score
If your score is low, improving it will take time! there is no quick fix. In fact, quick-fix efforts some times can make it worse. read & follow these tips:

• Pay bills on time.
  Late payments and collections have a major impact on your score.
• If missed payments
  Get it current & keep it current
• Trouble making payments, contact your Lenders or get legitimate credit counseling.
  This won't help your score immediately, but if you manage your credit and pay on time, score will get better later on.

Tips on your Credit card balances

• Keep balances less than 50% of credit limits
  High outstanding debt balances effect score negatively.
• Spread your balance among your cards
• 1 or 2 credit cards close to maxed out while 2 other are not even used, avoid this.
  
• Reduce your debt by pay offs, not moving it around.
  Owing the same amount but having fewer open accounts may lower your score.
• Oldest Unused credit cards should not be closed
• it shows your credit history, the longer you have credit the better.
  
• Getting to many new credit cards that you don't need, just to increase your available credit.
  This approach actually could lower credit score, have a lot of new account buildup can look risky if you are a new credit user.

• Closing an account doesn't make it go away
• In fact closing a bad account could hurt your score.
  
• If you Rate shop for a given loan within a focused period of time.
  FICO® scores won't be reduced for a single loan within short period.

Finally, it's wise to check your credit report on yearly bases to make sure there are no mistakes. Get a FREE report at http://www.annualcreditreport.com and fix any discrepancies. You can dispute discrepancies online if you have documents to prove it at experian.

Note,Paying off a collection account will not be remove from your credit report, if years old collections are paid, it will show as a current late payment transaction and could even reduce your Credit FICO Score

Unless a lender specifically requires this collection to be paid, this will stay on your report for seven years.

Loan programs & description

Loan program	A good loan for borrowers who:	Loan description
30 YEAR FIXED RATE	- plan to live in home more than 10 years - like total payment stability	Interest rate & monthly payment will be the same for 30 years
10/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 10 years - like initial payment stability, can accept later changes, OR - plan to move in 10 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 10 years Starting the 11th year, interest rate adjusted every year, payment is subject to change every year after first adjustment.
7/23 (2-Step) or '30 due in 7'	- plan to live in property more than 10 years - can tolerate one payment adjustment OR - plan to move within 7 years - want to remain in force in case plans change	Interest rate & monthly payment remain the same for 7 years Conversion option:On the 8th year, rate adjusted to reflect prevailing rates, payment will remain same remainder of loan
7/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 7 years - like initial payment stability, can accept later changes, OR - plan to move within 7 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 7 years Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan
7 YEAR BALLOON	- plan to live in property more than 7 years - are willing to refinance at prevailing market rates, OR - plan to move within 7 years - like payment stability	Interest rate & monthly payment remain the same for 7 years At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates
5/25 (2-Step) or '30 due in 5'	- plan to live in property more than 5 years - can tolerate one payment adjustment, OR - plan to move within 5 years - want loan to remain in force in case of plans change	Interest rate & monthly payment remain the same for 5 years Conversion option: On the 6th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan
5/5 & 5/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 5 years - like initial payment stability, can accept later changes , OR - plan to move within 5 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 5 years Starting the 6th year, interest rate adjusted every 5 years (for 5/5 ARM) and every year (for 5/1 ARM)
5 YEAR BALLOON	- plan to live in property more than 5 years - are willing to refinance at prevailing market rates, OR - plan to move within 5 years - like payment stability	Interest rate & monthly payment remain the same for 5 years At the end of 5 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates
3/3 & 3/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 3 years - like initial payment stability, can accept later changes, OR - plan to move within 3 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 3 years Starting 4th year, interest rate adjusted every 3 years (for 3/3 ARM) and every year (for 3/1 ARM)
1 YEAR ADJUSTABLE RATE	- want to take advantage of lowest rate possible - are willing to accept yearly payment changes, OR - cannot qualify at higher rate programs	Interest rate adjusted every year, so monthly payment is subject to change every year for entire 30 year loan term

Loan Application

Here is a Link to Residential loan application form, Its a long form.

Applying for a loan is like doing your taxes, not much fun but once you get organized it will become easier. Items you need to fill the form; SS #, employers & residences, bank statements. (Full doc. loan program only, 2 most recent pay stubs to figure income)

Help filling out the form

Begin filling out each relevant line. Leave lines blank if they don't pertain to you
*** Leave Section I, Type of Mortgage & Terms of Loan, blank
*** Fill out Section II, Property Information if you know & Purpose of Loan
*** Fill out Section III, Borrower Information, with personal information
*** Leave Section VII, Details of Transaction blank
*** Fill out Section VIII, mark the question YES or NO
*** Fill out Section IX, read, Sign, date & fax

Check your credit report free at Federal Trade Commission or go directly www.annualcreditreport.com it is advisable to fix any discrepancies before submitting for a loan. You can dispute discrepancies online if you have documents to prove it at experian. See below for improving your credit score.

Some Tips

* When two people are applying for the same loan, the primary money earner is typically the borrower, not the co-borrower; but the order won't affect your application.
* If your company given "PIN" number for automated employment verification, provide that number or have your employer issue your number. It could take up to 2 weeks to get a number issued!
* less than 2 year history in the same type of job, guidelines require 2 years history, exception, sub prime with higher rate @ least 1 year, unless coming out of college with a professional degree.
* self-employed, federal & any corporate tax returns, profit and loss , 2 years.
* Keep it real. Don't fudge any information on your application. Banks and lenders don't like false information, it could cause a lots of hassles or loan denial, consult with your loan officer.
* if your Credit score is low or found discrepancies read.