Many residents in Phoenix, Arizona have recently decided to either purchase or refinance their dream home only to discover that they have less than perfect credit. Don't be discouraged. There are many ways to rehabilitate your credit. Here are a few key tips to improve your credit score in the quickest and most effective manner.
•1. Review Your Credit Report For Accuracy - It is advantageous to check your credit report to make sure the credit bureaus have not reported anything in error or that you have not fallen victim of identity theft. Any identified errors should be corrected immediately.
You can access this information prior to applying for a mortgage loan by going to http://www.annualcreditreport.com/. You can receive a free report from each of the three national credit bureaus every 12 months. This inquiry will not have any impact on your credit score.
•2. Examine Your Credit Limits and Balances - To maximize your credit score, the general rule of thumb is to keep you credit card balances below 30 percent of the available credit limit. Make sure that all credit card companies are reporting your available credit limits. If there is no limit reported, the credit reporting software will automatically see the account as being "maxed out". This will have a negative impact on your credit score. After you have assessed that all of the accounts are reported correctly, your next step is to try to get the balances within the 30 percent threshold. This can be achieved by either paying down the accounts as much as possible or distributing balances amongst multiple cards in an attempt to keep the balances at lower levels.
•3. Pay Past Due Balances - Delinquent accounts are those that report a "Past Due" balance on your credit report. Your credit score is negatively impacted the most by these accounts. These amounts should be paid off first, especially if you have limited funds. This should yield one of the quickest improvements to your score. 
•4. Pay Recent Charge-Offs and Liens - Charge-offs and liens that have been reported on your report within the last 24 months are causing major damage to your credit score. These balances should be paid off after the past due balances have been satisfied. Once paid, make sure the company/lien holder reports the account as PAID to the credit bureaus. Any charge-offs and liens that are greater than 24 months are no longer causing additional detriment to your score and can be moved down in priority for the time being.
•5. Keep Old Credit Cards Open and Active - Do NOT close credit card accounts, especially if they have higher limits and have been open longer than two years. Not only does your credit score factor your debt balance to available credit limit on a per account basis, but it also analyzes the overall debt ratio as well. Closing a credit account could reduce your total available credit limit, whereby increasing your overall debt ratio and causing a negative effect on your credit score.
The age of your credit history can help your score. It is perceived that the longer you have an account open and in good standing, the less likely you are to default. However, the account will be deemed inactive and will have no advantage to your score if it is not at least utilized every six months. It is to your benefit to use these cards and maintain a positive payment history. To avoid the interest charges, you can simply payoff the entire balance as it becomes due.
These are just a few of the general ways to begin improving your credit scores in an effective manner. Before you begin your search for your home in Phoenix, Arizona, you should contact the Krushinsky Team at 480-339-1566 to find out how a mortgage lender will analyze your credit score. Each individual's credit history is unique and may require a more customary approach. Our team also works with and can refer you to certified experts that can help you increase your credit score.
The Krushinsky Team wants to assist you in qualifying for the best possible financing to help you reach your homeownership dreams. If you have additional questions call 602-695-7575 or david@dkhomeloans.com.
