Know and Improve Your Credit Score

Real estate is a buyer's market right now because of the mortgage crisis. But buying a home isn't as easy as you'd think. That's because banks aren't willing to risk even more of their assets by extending mortgage loans to borrowers with bad credit. Sometimes fair credit isn't enough to secure a loan, either. So thousands of homes are wasting away on the market, waiting for buyers with good credit to come snap them up.

Don't miss out on your opportunity to be a homeowner. If you want to purchase a home at today's low prices, you've got to know your credit score. And if it's low, you should take steps to improve it.



What are creditors looking for? The magical number is 680, though some lenders require scores no lower than 720 for mortgage loans. There are state-run programs that help with home purchases for individuals with truly bad credit scores. But if your own score falls somewhere in between good and bad, you're going to have to do some work to whip it into shape.

You can see your credit score by contacting Experian, TranUnion, and Equifax credit bureaus. You're entitled to one free credit report per year, which you can request at AnnualCreditReport.Com. Also, CreditReport.Com will supply a free copy of your credit score and enroll you in a 30 day free trial for their credit monitoring service. When you subscribe to a credit monitoring program, you receive a notification any time a change occurs on your credit report. These programs can be found online for as little as $11.95 per month – a real bargain if you’re serious about improving your credit score.

You might be surprised by what you find on your credit report. Your credit score could be affected by items that don't even belong to you! To dispute a negative item, send a letter by certified mail with return receipt requested to both the credit bureau and the creditor who reported the negative item. You can find a sample letter at the FTC's web site. Creditors will have thirty days to prove that the item is valid. If it’s not, the credit bureau is obligated to remove the item and send you a copy of the corrected report. Once negative items are dropped, your credit score will improve.

What about negative items that you actually earned? Those can be disputed, too. Many companies won’t bother fighting over old accounts that have gone to collection agencies. Just be aware that credit bureaus aren’t required to investigate disputes that they deem to be frivolous. The sure-fire way to get valid negative items off of your credit report is simply to pay your outstanding debts.