What you gonna do when they deny you because of a bad credit score?
I got my credit score the other day.  We’re about to refinance our house and this was the beginning of the process.  My score was always stellar – high 700’s at one time over 780.
This time my score was just below 720.  By some people’s standards, not bad. Well, in this lending climate it’s not great.
When I began selling real estate over 14 years ago, a score of 620 or higher was considered pretty good.  At the end of the last decade, 680 was the minimum needed to get favorable rates.  Last Spring, the minimum score needed for the good rates was 720, and now lenders say borrowers need a score of 730 to 740.
What drove down my score and what should borrowers pay attention to?
1.  My former husband had two credit card accounts that were closed, but for some odd reason were being reported with balances.  I never had this particular brand of credit card, but I was listed as an “authorized user.”  This was bad news for two reasons: first was the reported balances, and second was that these two cards, on top of my actual credit cards, skewed my ratios to look like I had way too much unsecured credit.
2.  I got in a fight a few years ago with a certain Visa issuer (Chase.)  One day, I decided to check my account on their site. This somehow changed my bills to paperless, but I didn’t realize the change had happened.  Subsequently, I read that this happened to scores of people.
I waited weeks for my bill, called Chase and told the rep I hadn’t received it, and his response was, “huh, we mailed it.”  A week later, still no bill. I again called and authorized a draft over the phone.  What did Chase do? They reported me as “seriously delinquent.”  More than 30 days late.
I called Chase again and begged.  Pleaded.  Explained that I’d had their stupid card for years and had never missed a payment.  Their response? “Well, you missed this one.”
What did I do then?  Totally peeved, I closed the account. Take that Chase!
Guess what that did to my credit report?
Again, this was bad news for two reasons: first was that I had a “serious delinquency” and the other was that the account stated, “delinquent, closed.”  That does not look good to the credit agencies.  Plus, a seasoned or older card is much more valuable on your score.
3.  Finally, two of my credit cards were nearly up to the credit limits.  Credit reporting agencies want to see your revolving credit be only about 30% of the limit.  So if you have more than one card, spread the love, but not more than 30% of it.  And of course, pay by cash as much as possible. That’s our new mantra – cash. Forget the miles. Use the cards a little to keep the credit agencies interested and your score high.
The good news is that these items can be relatively easily fixed for many people.

• Pay off as much revolving debt as you can, spread your debt over the cards you have.
• Don’t cancel cards you’ve had for a long time, just stop using them.  Seasoned cards bear a lot of weight on your report.
• Don’t apply for too many credit cards.
• Make sure that your credit report is correct and dispute cards or other debt that appear and don’t belong to you.

After 30 days, your score will begin to come up and it should happen pretty quickly.  MSN Money has written about fixing your credit score and you can check your credit report at Experian.  Keep in mind that you do not need to pay for your credit report, you can access a free one every year.  However, these reports typically do not include the FICO score that lenders use to evaluate you.
According to my lender, the basic fixes I did should positively impact my score in about a month.  If you’re thinking about buying or refinancing a house this year, begin to get your score straight now.  You may need more than 30 days or you may already be Platinum!


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