How To Build A Better Credit Report

Every time you ask a lender for credit, whether you're opening a store account or applying for a 30-year mortgage, they're going to review your credit report. The lender will look at your total credit score, your past ability to make payments on time and your current debt load. They do this to determine not only your suitability as a borrower, but also what kind of interest rate they'll charge you.

To secure credit and a good interest rate, you need what's called a "lender-friendly" credit score. In this article, we'll show you how a credit score works and what you can do to begin building a better score today.

How Credit Scores Work

Your credit score is a numerical rating, determined by credit bureaus, often called a FICO score. Credit reporting agencies use your borrowing history, repayment ability, type of credit and your debt-to-available-credit ratio to come up with a score that rates you as a borrower. In turn, lenders use this score to gauge your suitability as a credit recipient. The outcome largely determines whether you will be offered a loan at all, and if so, your interest rate.

So, how can you build a better score and a lender-friendly credit report? Keep reading for 5 ways you can improve your credit rating.

1. Review your own credit report. Under the Fair Credit Reporting Act (FCRA), you're entitled to one free copy of your credit report every year. Use it. Order a copy of your report and check for any errors. Always contest misinformation on your credit report, especially where you have the paperwork to validate the inaccuracy. Whether it's misreported late payments or a loan you never took out, it's important to clear your credit report of any incorrect information.

2. Start making payments on time, every time. Rebuilding your credit isn't going to happen overnight, but if you can make your payments on time every time for at least a year, you'll see your credit score improve exponentially. If your monthly payments are too high, don't be afraid to ask your lenders to reduce the payments.

3. Negotiate with your lenders for a better report. If you have some old late payments with a creditor, ask them to "re-age" the account. This means, if you can make 12 consecutive on-time payments, they'll update the account report and erase the old late payments.

4. Don't close old cards. Once you've paid off old credit cards, don't close the accounts as this can have a negative effect on your credit. Part of your overall score is based on your debt-to-available-credit ratio. Most lenders want to see your debt at about or lower than 30-35% of your available, meaning 2 maxed-out credit cards is worse than 3 half-full cards.

5. Stop applying for credit. Every time you apply for credit, that request is registered on your credit report and can have a negative impact on your score. If you are mortgage shopping, try to limit your search to a 2-week period as the credit bureau will consider all the checks in that period as one.


We hope you have found this information valuable. We currently offer numerous custom loan programs to fit your needs. Please contact us at 716-685-9696 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.


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Ron Fronckowiak

Licensed Mortgage Professional

NMLS ID 7054