If It’s Not So Good, Fix It.

So you just heard back from your lender about your credit score and it wasn’t good news.

Hey, it’s not the end of the world. Sometimes your credit score is not so good. There are two ways you can look at it:

You don’t have a good score and that’s just the way it is.

Or, you don’t have a good score and you’re going to fix it.

We vote for the latter.

Fixing your score will not only help you get approved for the loan you want, it will literally save you tens of thousands of dollars in interest over the life of the loan. Let’s get to it.

Get Feedback

First up, notify your mortgage loan officer if you would like some credit advice. Our team of mortgage loan officers are experts who look at credit reports every day. They know the scoring systems, the weight of different factors, and possible actions to improve your score. A mortgage loan officer isn’t just someone who makes photocopies of your W-2s and hands you forms to fill out. They are there to be your guide through a complex process — the mortgage application.

You should be able to get some quality feedback about your report from your mortgage loan officer on any problem areas. Don’t be embarrassed to ask for advice on what you can fix and how to go about it.

Fix Errors

If any of the problems pointed out by your lender are credit report errors, fix them. These are some of the easiest problems to fix on your report — they don’t require you to shell out any extra money, improve your finances, or wait them out.

It’s estimated there are millions of errors on credit reports, so pay attention to outstanding debts you thought you paid off, numbers that don’t match your records, or what looks to be fraudulent activity.

To fix an error, contact both the credit reporting agency in question and the place that gave them the faulty information. Each of the three credit reporting agencies — Experian, TransUnion, and Equifax — has an online submission form for disputes. These guys are required to review and respond to your claim within 30 days.

Short-Term Fixes

If you do have legitimate problems with your credit, some can be fixed easier than others. Start with the easy stuff.

Pay Your Bills – If you’re late or behind on any payments, catch up. Always forgetting the phone bill? Switch to automatic bill pay. Have an account in collections? Pay it off.

Reduce Your Balances – Using too much of your available credit will count against you, so pay down credit cards with higher balances. Can’t pay off a high balance? Transfer some of the balance to another card. Whatever you do, don’t close any accounts. That reduces your overall available credit, which raises your debt-to-credit ratio, the opposite of what we’re trying to do.

Don’t Apply for New Credit – This one’s pretty easy. Don’t apply for new cards, car loans, or personal loans while you’re trying to buy a house. Each inquiry — even if you don’t use all the credit on a new card — counts against you.

Long-Term Fixes

Some credit score problems just take time to fix. The sooner you get started working on them, the sooner they’ll improve.

Improve Your Credit History – Fixing errors and delinquencies will help your report in the short term, but lenders really want to see smart credit management over the long haul. Make an effort to keep up with bills and continue to pay down balances. The longer you do so, the better your score will be.

The Learning Center is an educational tool and the content is for information purposes only and is not intended to provide investment, legal, tax, or accounting advice, nor is it intended to indicate the availability or applicability of any Wailuku Federal Credit Union product or service to your unique circumstances. All examples are hypothetical and for illustrative purposes. Although we have obtained content from sources deemed to be reliable, Wailuku Federal Credit Union and its affiliates are not responsible for any content provided by unaffiliated third parties. You may wish to consult an appropriate advisor about your unique situation. The applicability of this information to your circumstances is not guaranteed. You should obtain personal advice from qualified professionals.