In the last couple of years, how many times have you left your favorite grocery store and not used your “membership” card when you are checking out?
Even if you forgot the card or your phone number is not linked, did you look at the people in line behind you to see if anyone would share their savings card with you? Why would you spend 50 cents more on bread if you did not have to? These days having great credit is just like having a “membership savings” card on some of the biggest purchases you will make over your lifetime.
Take my client, Nicole for example. She contacted me when she had been searching for a home for over 6 months and not finding anything for the amount she qualified for with her lender. The lender said her maximum purchase price would be $250,000 based on her credit score and the amount she was putting down. When I looked over her credit, I saw a $41 collection on her credit report. She wasn’t aware of what the $41 collection could be but nevertheless thought $41 couldn’t possibly be affecting the amount she would qualify for. I explained to her that any collection reporting to the three bureaus within the last 24 months, regardless of the amount, would bring her FICO mortgage score down the same as if the balance was $41,000. She contacted the collection company and told them she did not believe it was her account but she would be willing to pay it today in full if they would delete it and provide something in writing.
They provided her with a letter, she paid the debt and I submitted the paperwork through Rapid Rescore. Three days later, her score went up 68 points. This effect on her credit score from this deletion reduced the estimated monthly payment by over $400 a month. She was able to increase the amount she qualified for to $335,000 versus $250,000 and just a week later, her offer was accepted on the ideal home for her and her family.
By understanding the formula for a great FICO score, you don’t have to have the effects of bad credit cost you more in life. Even if you aren’t able to fix the bad credit, at a minimum, you can start today with opening and set up a system for the right accounts to start reporting and those accounts will drown out the bad with good over time.
Check out my Easy as 1 2 3 Program to start building a great credit score today!