Arizona Homes for Lease Option Home Purchase

How to Improve Your Credit Score

By JAY ROMANO


DO you know your credit score? If you do — and if you don't, you should — you may be able to improve it in just a few months.


"The credit score is a significant factor used by lenders to determine both the interest rate and type of loan program a borrower is eligible for," said Oded Ben-Ami, a senior loan officer for Sterling National Mortgage in Great Neck, N.Y. "And there are circumstances in which even one point either way can make a difference."


The credit score, which ranges from 300 to 850, is basically a quantification of an individual's creditworthiness. Generally, people with scores below 620 are considered poor risks, and those with scores above 680 are considered acceptable risks. The median score in the United States is 723; typically, the higher the score, the lower the mortgage rate a consumer will pay.


The Fair Isaac Corporation, a Minneapolis data management company, developed the formula that is applied to raw data in consumer credit files of the three large credit-reporting bureaus: Equifax, TransUnion and Experian. The result is known as the FICO score.


Craig Watts, the public affairs manager for Fair Isaac, said the factors considered include whether debts are paid on time, what type of credit has been granted in the past, how much of the available credit has been used, and whether there are any judgments, foreclosures, bankruptcies or liens.


While a FICO score is based upon several years of credit history, consumers may be able to raise their scores fairly quickly. Gerri Detweiler, a spokeswoman for an online consumer financial service called EverydayWealth.com, said the first step is to get a current credit report from each of the three bureaus. "If there are mistakes that are damaging your credit, you have a right to get them off" by writing to the company that issued the report, she said.


For example, Ms. Detweiler said, late-payment information more than seven years old should not be included. (Bankruptcies, tax liens and court judgments are not subject to the seven-year limit.)


Another way to improve a score is to reduce the balance on credit cards that are near their limit. And while the most improvement will result if the balance is actually paid down, it may be possible to improve your score by transferring some charges to a card with a low balance.


Those considering taking out a mortgage in the next few months should avoid making substantial charges to credit cards, even if they plan to pay the full balance.


"What the report shows is a snapshot of a specific moment in time," Ms. Detweiler said. If the report is issued before the balance is paid, it could make you appear less creditworthy than you actually are.


Another strategy that may increase a credit score is "piggybacking." Consumers who do not have much of a credit history will not have a good credit score, Ms. Detweiler explained, even if the history they do have is good. But if they are added as an authorized user on a card issued to someone else — a parent, perhaps — the credit history of that card may be reflected on the user's credit report as well.


Mr. Watts of Fair Isaac said that one thing consumers should avoid in trying to improve their scores is to close old accounts. Since the FICO formula takes into consideration how long a consumer has had a particular credit account, closing a longstanding account could damage the score. And since the formula factors in the ratio of used credit to available credit, closing an account will increase that ratio and could reduce the score.


Once a year, consumers can obtain a free copy of their credit report from each bureau by going to annualcreditreport.com. The FICO score based on a specific credit report, along with a copy of that report, is available for $14.95 from myfico.com, a Fair Isaac Web site.



Arizona real estate rent to own

A Few Benefits of the Real Estate Lease Option Program in Arizona

Split of Equity Growth - You have the opportunity to realize a portion of any appreciation growht while you live in the home.

Rent Credit - Money is working towards the purchase of the home each month that you pay rent on time and will be credited towards your down payment or taken off the sales price.

Option Consideration - This is credited towards the purchase of the home when you execute your option, lowering your purchase price.

Minimum Cash Needed - When you purchase a home conventionally, you must pay closing costs, pre-paids and a down payment. With a lease option contract, you pay only the first month's rent and an Option Fee.

Closing Costs Are Delayed - Your closing costs will be delayed (not avoided) until you actually close on the home.

Profits from Appreciation – When you exercise your option, not only will you have equity from your Option Fee and rent credits but you'll also receive an equity split, meaning you will also receive a percentage of the equity from appreciation in the property.

Buying Power - Your buying power is drastically increased. You can get into a Lease-Option home for as little as the first month's rent and the Option fee. Compare that to a lender who requires 10-20% down plus closing costs and pre-paids.

Credit Problems ok - Qualification restrictions are not as strict as conventional financing. You will be approved at the sole discretion of Complete Real Estate Solutions, LLC.

No Taxes, Less Liability - Since you do not own the home yet, you will not have to pay property taxes and your liability exposure will be drastically reduced.

Time before you actually buy the home - You will have time to repair your credit, find the best financing available, investigate the home and research the neighborhood

Quick Move In Time - Move in time is typically less than one week compared to conventional move in times of one to three months from the time the offer was made.

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