Set your sights on more than 620 credit score

Q: I am cur­rently try­ing to buy a house for the first time. I am apply­ing for a VA Loan but seem to be under the min­i­mum credit score. I believe they told me it needed to be 620 and I have a 610. Is there any­thing I can do to bump this up quickly? Thanks for your help!

–Roberto, San Anto­nio, TX

 A: Whether or not you can get a mort­gage, with a credit score of 610 or 620 you’re not really sit­ting in an ideal place. In fact, being at 750 or higher is what you should be shoot­ing for, espe­cially in today’s tight lend­ing envi­ron­ment. A higher score will ensure you’re able to bor­row when you need to, and also get a com­pet­i­tive rate. My point is that whether you are able to inch your score up in the near term or not, you should be striv­ing to bump your score up big time over the long haul.

 The chal­lenge is that every person’s credit sit­u­a­tion is dif­fer­ent and will be impacted in a dif­fer­ent way by dif­fer­ent actions. What we do know is that over the long haul there are sev­eral key fac­tors that drive your score:

 Pay­ment his­tory: pay on time every time, period.

What you owe: what you owe rel­a­tive to your avail­able credit makes up the all impor­tant “uti­liza­tion ratio”—less is more. Shoot for a ratio of 30% or less.

Num­ber of inquiries: lots of credit appli­ca­tions is not good for your score.

Types of Credit: install­ment loans, revolv­ing credit, and mort­gage debt—a nice mix of dif­fer­ent types of credit is good for your score, so diversify.

Length of credit: a long his­tory of respon­si­ble use of credit is a pos­i­tive. Keep those older credit accounts active.

 Fol­low the above guide­lines and over time you’re score should increase. As far as short-term fixes, here are a cou­ple strate­gies that might help nudge up your score in the short term:

 Check for errors: are there errors on your report that are caus­ing your score to dip. Per­haps another person’s bad credit actions are on your report or incor­rect credit lim­its are being used to cal­cu­late your uti­liza­tion ratio. Who knows, there are lots of errors on credit reports and you may be able to dis­pute errors. Visit www​.annu​al​cred​itre​port​.com to view your report.

 Raise your lim­its: ear­lier I men­tioned the uti­liza­tion ratio as an impor­tant fac­tor in your score. Well you can drive that ratio down by pay­ing off debt and that’s a good thing, but you could also reduce the ratio by rais­ing your avail­able lim­its. I’m not say­ing use more credit, just request higher lim­its to help improve this ratio.

 Good luck in mov­ing towards a much higher score. It will take some time, but in the end it will save you a lot of cold hard cash in lower inter­est rates and a whole lot of headaches in terms of access­ing credit when you need it.

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5 responses to “Set your sights on more than 620 credit score”

  1. Pay­ing on time is always a good idea, but are you refer­ing to util­ity bills and such? How about den­tist bills and the like if they’re big, but get peri­odic payments?

  2. I recently applied for a VA loan but found out some very dis­turb­ing news. I had stuff on my credit report show­ing unpaid that had been paid for a cou­ple years. Is there any­thing I can do about that? I have already dis­puted them and they are show­ing paid, but the dam­age to my credit score is done now because they just got fixed. I am sit­ting at a score of 599. I am short term look­ing for the 620 and long term look­ing for way more. What can I do right now to get those points to get my house?

    1. Bradley, I work with dam­age credit call the time. Please feel free to give me a call at 630–606-9921 Cpl. Ronald Peake, Jr. USMC

  3. June’s infor­ma­tion is mis­lead­ing & only use­ful for peo­ple with credit already becom­ing… Nowhere in this arti­cle is there help in try­ing to weed out the bar­rage of 5 year old med­ical bills for $25 that shouldn’t be on your report. Those have no bear­ing on mak­ing for a good report, but every­thing to do in mak­ing a bad one…

    Nor is there any regard for estab­lish­ing credit for folks with­out credit to begin with. The credit sys­tem was cre­ated by greed dri­ven indi­vid­u­als who want to make the­o­ret­i­cal money from real money. I.e., deriv­ing pay from no work.

    Rais­ing lim­its, Num­ber of inquiries, Types of Credit, Length of credit, all those exam­ples were com­pletely use­less because credit has to be estab­lished in some form or fash­ion (in bulk) for any­thing of account to hap­pen. And TIME is not always a lux­ury we can count on.

    Thus becomes another avenue we all become taken advan­tage of through APR & com­pressed pay­ment sched­ules. All the more rea­sons the pay­day loan & legal­ized loan shark estab­lish­ments exist today.

  4. muito bom..!

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Scott Halliwell and JJ Montanaro are CERTIFIED FINANCIAL PLANNER™ practitioners with USAA Financial Planning Services, one of the USAA family of companies. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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