RAISE YOUR CREDIT SCORE 50 POINTS IN FORTY-FIVE DAYS Bruce Gustafson (303) Crestline/Universal Lending

What Is Your FICO Credit Score? Forecast of how well you will repay a loan as agreed during the next 24 months – the higher the score, the better the forecast that you will repay Snapshot of your credit history at a particular point in time Only includes factors related to an individual’s credit Always changing

Who uses credit scores and reports? Financial institutions Retail stores Utility companies Landlords Insurance companies Employers

Frequently Asked Questions How long does bankruptcy filing stay on credit report? 10 years Will my credit be affected while I “shop for rates”? No, as long as your inquiries are for specific loan types and within 45 days. Will my score drop if I apply for new credit? If it does, not much. If you’re applying for a mortgage loan for a short period of time (45 days) then these requests are treated as a single inquiry Does my score determine whether or not I get credit? No, because most lenders use a number of facts to make credit decisions.

Small mistakes that could mean bigger problems Personal identification information is incorrect Employment history includes a company where you never worked Accounts are listed more than once There is a hard inquiry from a company you did not submit an application to An account is missing

Other Common Misconceptions Balance transfers don’t hurt score Credit history contains only current account status Delinquent accounts now made current have no negative impact on score Bankruptcy “clears” both debt and credit record Divorce decrees regarding joint accounts must be honored by creditors Student loans not in repayment are not counted as debt

Fico Score – Mortgage Payment $400,000 Home Loan Fico Score APR Monthly Payment Extra Interest Paid % $2, % $2,055 $19, % $2,098 $34, % $2,150 $53, % $2,256 $91, % $2,395 $141,480

WHAT MAKES UP A CREDIT SCORE? Payment History 35% Balances Carried30% Credit History15% Mix Of Accounts10% Inquiries10%

PAYMENT HISTORY – 35% Bills Paid As Agreed Most Recent 6 Months Highest Weight On Highest Pay History –Mortgage –Biggest Payment

BALANCES CARRIED – 30% Keep Balances As Low As Possible Outstanding Balance Versus Available Credit Affects Credit Score For example: Credit CardBalanceAvailable Credit Visa$10,000$10,000 Visa$0$10,000 Leave Credit Card Balance As Is = Lower Credit Score Spread Balance Between Cards ($5,000 each) = Higher Credit Score Mortgage / Installment Less Of Factor

CREDIT HISTORY – 15% Longer Credit History = Higher Credit Score Long Credit History Paid As Agreed / Positive Impact To Credit Score Never Close Credit Accounts - Especially If Long History – Or Negative Impact To Credit Score

MIX OF ACCOUNTS – 10% Ideal To Have Installment & Revolving Accounts Mortgage Loan Auto Loan Credit Cards (More is OK too) HELOC Should Be Greater Than $40K Or Will Report As Revolving Account Versus Mortgage

INQUIRIES- 10% Shopping Around? Pull Multiple Reports For Mortgage and Auto 1 Inquiry Within 45 days (for each) Each Inquiry Averages 5 Points Only First 10 Inquiries Count Each Year After 10, Will Not Affect Credit Score

INQUIRIES THAT DO NOT HURT THE SCORE Job Related Insurance / Utilities Account Review Personal ( and obtain free credit report) Promotional (pre-approved offers in the mail)

BLEMISHED CREDIT CAN BE COSTLY Low Credit Score = Higher Interest Rate –Mortgage Loans –Credit Cards –Auto Loans –Insurance Premiums

STEPS TO TAKE TO INCREASE CREDIT SCORE 50 POINTS Pay Past Due Accounts Get Rid Of Late Payments Have Credit Limits Increased Do Not Close Old Accounts – Keep Active

PAY PAST DUE ACCOUNTS Pay All Accounts That Are Past Due Past Due Accounts Can = 1 Day Late Severely Hurt Credit Score

HAVE LATE PAYMENTS REMOVED Phone Creditor And Request Late Payments Be Removed Be Persistent – Work Your Way Up The Ladder Always Get A Letter That Documents: –Name / Address / Account Number –Specific Late To Be Removed –On Company Letterhead / Signed By Employee

INCREASE CREDIT LIMITS Every Six Months Request An Increase To Credit Limit On Credit Accounts Have Creditor Base Increase On Credit History If Creditor Must Pull Credit, Do Not Continue; Will Lower Credit Score

DO NOT CLOSE ACCOUNTS Keep All Accounts Open Use Old Accounts Periodically – Charge Small Amount - Pay off Immediately Closing Accounts With A Long Credit History Will Hurt Credit Score

SUMMARY Borrow When You Do Not Need It Keep Balance To Limit Ratio Low When Creditor Removes Late And Provides Letter – Use Credit Rescore Never Payoff A Collection / Judgment When Applying For A Mortgage Loan Ensure that creditors reports the credit limit. When a credit limit is not reported it may look like the card is maxed out when it is not.

SUMMARY Get (or keep) the good stuff going Build NEW good credit versus dwelling on old bad credit. New on-time payments improve your credit more quickly than paying off old debt Do not apply for new credit cards to replace old cards. Keep revolving accounts open – to lengthen a credit history and keep total credit limit higher than outstanding debt. Increasing Credit Score By 10 Points = Interest Savings of $100,000 Over 30 Years ($500K Mortgage Loan)