Your credit score. Are you on top of it?

We all know that your credit score is vital to your home loan process. With this being the case we have touched on this topic several times in our daily blog. I don't want to beat a dead horse, but after working with a few customers recently this topic is fresh on my mind.

Do not take your credit lightly. How your credit score is computed is very complicated and nobody really knows the exact formula. Everyone's report is different and it is tough to predict how a given event will specifically impact your report. With this being the case, all we can do is give you a few pointers. By no means is this the gospel when it comes to credit reports, but it should get you on the right track. Aside from the items I am about to list, it is a good idea to go to www.myfico.com, www.annualcreditreport.com, and other valuable sites to read about credit and check your report free of charge once a year!

1. Make all your payments on time or within the given grace period. Always be aware when you are nearing a 30 day late. If you are getting close, don't risk it. Call and pay by phone, online, or FEDEX. Whatever it takes so that you don't have a 30 day late. It just isn't worth it!

2. Absolutely take all precautions when the above rule applies to your mortgage! DO NOT miss this payment. This will devastate your score and the products you will qualify for. 1 30 day late can really hurt!

3. If you receive a collection call, get on top of it. I'm sure everyone has had at least 1 medical bill slip through the cracks. Many people are stubborn thinking, insurance should have paid that and just ignore it. Don't do this. Get on the horn with insurance and the collector! Take the time to figure it out. If you owe it, just pay it because they will not let it go. It will eventually end up on your report as a collection and it is best to nip it in the bud early! Always make sure you get a paid receipt on company letterhead to show this is paid and has a zero balance. This can really come in handy if you find out down the road it never was updated on your credit report.

4. I never recommend co-signing for a loan, but if you do be careful. Always stay on top of this. If you get a divorce, make arrangements to get off any notes since it will be tough to monitor. I see these situation go bad all the time and it can really hurt!

5. Never go over limit on your credit cards! Even if you pay on time every month, an over the limit account hurts your score.

6. Try to stay at no more than 50% useage on your credit cards. This means if you have a $5000 limit, don't carry over $2500 on the card. This is a highly over looked part of the credit scoring process. They want to see that you are not maxed out or close to it!

7. Tax liens or judgments. Obviously you don't want these and if they come about, they are many times the result of a crisis. However, take the appropriate measures with the IRS or collector who placed the judgment to wipe them out as fast as possible. These must be paid off in many loan scenarios and of course damage your credit. Tax liens also come with hefty interest and penalties!

8. Try to avoid the credit counseling services that offer to reduce your monthly payments etc.. I have not seen where these help and they report on your credit report that you are working with a company like this. This is also not good.

9. If you do file bankruptcy, make sure you follow up with all your creditors afterwards and make sure your accounts are reporting properly. If it was included in your bankruptcy, make sure it shows as such. I always seem to see accounts linger on peoples reports that are inaccurate. By doing this, it is much harder to rebuild your score!

These are just a few tips for the most common blips we see on credit reports every day!
If you are trying to repair your credit right now, I know it is a painful process! Nobody seems to be willing to help and it can be grueling! Once you are in a hole, it is easier said than done to payoff these items! Just stay focused and follow up repeatedly with creditors to make sure they report your account properly!

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