How Can I Improve My 630 Credit Score?

April 17, 2013

Having a 630 credit score isn’t bad nor is it that great.  Creditors set few guidelines that credit scores above 760 have the lowest risk and can get the best interest rates in acquiring new credit cards and loans.

But let’s say, an individual wants to get a home loan with a credit score of 630, will he/she be approved? 

The answer is; it depends. It depends on what type of home loan you are applying for.  Based from credit experts, if you have a score of 630, you will be approved, but it doesn’t guarantee you to get the lowest interest rates.  So what they suggest, instead of sacrificing the advantage of getting the best rates for your home loan, take time to improve your credit score for 3-4 months.  Let’s go back to important determining factors:

  • Credit Score and Maintaining a Good StandingFor the next consecutive months, never miss a payment on all your financial accounts.
  • Your usage on all your credit accounts should be much less than 30% of your credit limit.
  • If financially capable, payoff 90% of your balances on all your accounts.
  • You can’t afford to have a returned payment.  That is why it is very important to be updated with all the payment details.  If you have an automatic payment or direct debit, ensure that your bank details are all updated and correct.
  • If you have authorized users on your credit card accounts, you must monitor their charges as well.  Or better avoid them from using the credit cards temporarily.  The next few months are something critical and you can’t afford any mistakes to happen.
  • Avoid using your credit cards online to prevent any possible fraudulent or incorrect transactions.  Because if it happens, we know that disputes are hard to be resolved overnight.  It takes a while; to make it worst depending on the severity of the fraud transactions it can take few months, it can lead to greater disappointments, knowing that your goal is to improve your credit from 630 to a much higher one for the next 3-4 months.
  • If any emergency situation occurs, let’s say a late payment might hit the account.  Never allow it to happen.  Find ways to prevent it from happening.  If it means sacrificing something to avoid that late payment, do so.  If you need to call your bank for a payment extension, do so.  That is why it is very important to build a good credit and relationship with your banks and credit card companies.

Every time you’re calling their Customer Service, agents can see your credit history with their bank, even the simplest request or complaint you have made, they have all these information noted, once they see that you’ve been handling the account very well and if you need help during unexpected situations, they are very much willing to assist and help you the best way they can.  It’s proven.  This is the importance of establishing a good reputation and credibility.

All information listed above can be challenging for few but can also be easy for some.  We have our own ways to achieve a goal.  What matters is the determination and patience to achieve it.  Improving a 630 credit score may be hard, but it is possible.

How Will a Late Payment Hurt My Credit Score?

April 17, 2013

Late payments can greatly hurt your credit score.  We don’t need an expert to inform you in detail why having late payment is a bad thing.  This is common sense.  Credit scores are being based on how good we are in handling our finances.  This will determine how responsible we are to be approved for credit card accounts and various loans.

There are different reasons why we tend to have late payment on our accounts.  It can be intentional or unintentional.  Financial institutions such as banks know all these common reasons why customers are having these late payments on their account.  These common reasons include:

Non-receipt of bills

Emergency/hardship situation

Misapplied payment

Missing payment

Late delivery of the payment

Credit Score TrapsThese are commonly used by the customers as reasons why they are late in their payments.  Which of these reasons do you commonly use?  Before you get irate and shout at the customer representatives following up on the other end of the line, validate the frequency and validity of your reason.  Is this the first time that happened?  Or does it keep happening every month?

First, let’s talk about bills not being received by customers.  Have you recently changed your address?  Nowadays, people don’t rely on paper billing alone because mostly everything can be done online.  The first time you use this excuse, it may be acceptable.  But when you’re given that information already and still you rely on paper billing, then that’s something different.

A lot of things can happen to ordinary mail, like incorrect and lost deliveries, and you can’t blame it to your credit company.  That is the main reason why you’re given that option to view and download it online.  It is mainly our responsibility to handle and manage our bills to be paid on time.  We use it, we pay for it.  If we can’t afford it, don’t dare using it.  Let’s just keep it simple.  But how we differ from other credit card holders is how we make payments on our account.

Next common reason is due to an emergency or hardship situation, this is the most valid reason a customer can have.  Like unexpected scenarios, calamities, emergency in the family, these are few things that a company will consider to offer you a payment extension to avoid a late payment hurting your credit.  There are certain terms and conditions that we need to follow though to make these reasons valid.

For misapplied or missing payment, these are easily verified as long as we can present proof that payment has been made.  Disputes can be requested with our financial companies that a delayed payment should not be reported because of the missing or misapplied payment.  This is the reason why it is very important to always get the receipt for every payment we made to easily track the payment and to obtain the cause of the error.  You can’t dispute something that you don’t have proof for.  Without it, how can they start and resolve the dispute?  Think, before disputing something.

With regards to delayed payments caused by late delivery via post, same thing as long as we have the receipt from the post office when was the payment made, it can be resolved.  It is better though to take advantage of any other payment options instead of sending it via post, like direct debit and online payments for our own convenience.

These are the most common excuses we have once we have late payments.  For every excuse, there is a resolution.  If not, we can use it once but it is unacceptable to continue using it.  At the end of the day, credit scores are being computed based on how we pay our debts.  And if we are late, we are being validated by how frequent and severe we are late.  If in doubt about the late payment policy of your creditor, don’t hesitate to give them a call.

Credit Cares for a 630 Credit Score

February 25, 2013

With the credit issues faced by millions of consumers today a 630 Credit Score is considered fantastic. However, if the truth were told, 630 is about in the middle of the range of credit scores. On the high end you have, credit scores in the 800-range (truthfully), while on the low end, you can have consumers, who may have had credit and other reverses, who have credit scores in the high-300 range.

How does one maintain or care for a 630 credit score​​​? The most obvious answer is to pay one’s bills on time or early. And the corollary to this is to keep one’s expenses under control so that one doesn’t get in over one’s head.

For example, with a 630 Credit Score you will likely be bombarded almost daily by offers from banks or directly from credit firms for new Visa or MasterCards promising 0 percent interest for the first three or six months, if you take advantage of the offer.

Credit Score and Maintaining a Good StandingHere’s something they do not tell you and it is simply that though you have been “preapproved” for a credit card, you will still have to fill out a standard credit application and that credit application will have to go through the standard process for credit approval. In other words, by filling out the form, you are authorizing the bank or credit card issuer to pull your credit – something far different than just checking your credit rating. Once your credit is pulled, you will find your 630 Credit Score will slip a bit to, possibly, 618, simply because the bank or credit card issuer has initiated the credit approval process, a far more important and involved process than just looking at your credit rating.

It’s really like Joseph Heller’s “Catch 22,” the famous World War II novel, where Yossarian is asked if he wants to fly by a flight surgeon, who has two check boxes in front of him one of which equals saying you want to fly indicates you are crazy and need treatment and a second when you reply you are scared and don’t want to fly which also indicates you a crazy and need treatment. Thus, you have the phrase “Catch 22” predicament.

If you give in, you are considered nutty, but if you try to opt out you are also considered crazy. In either case your 630 Credit Score is now history.

To combat this, you just have to resist the urge for one more piece of plastic for your wallet and throw the “preapproved credit application” in the trash. Further, you must keep control of all of your expenses so that your income and your spending remain in balance. If possible, you may even try to put aside a little savings for the inevitable “rainy” day. The rule of thumb here is that if, at all possible, try to have at least half-a-year’s worth of savings stashed in your savings account so that you can pay your bills and live comfortably.

To recap, here is what you have to do to protect a 630 Credit Score:

  • Pay your bills on time or early
  • Pay off your credit card balances regularly and keep them very low, if not at zero on existing cards
  • Pay any outstanding bills on time or early. Those bills can include your car; car insurance, and any other consumer loans
  • Pay your rent or mortgage on time or a little early
  • Never live outside your means. This means that you may have to forget the takeout Chinese lunch and brown bag it from home
  • Save as much as you can

If this seems like it is work, it is! Given today’s economy and the amount that people are tipped (owe more than they take in) rather badly because they keep living over their heads (the next time you go to the market see how many people pull out their plastic to pay for their food, rather than using cash and then watch as several of their cards are refused).

It takes work to keep your credit rating up, but, if you do it, you will benefit in the long run.

Can I Get a Mortgage with a 630 Credit Score?

February 25, 2013

This is an interesting topic and the answer is one of those that says: “It depends!”

Whether you can get a mortgage with a 630 Credit Score, depends on a number of factors, some of them external and other others internal.

Can I Get a Mortgage with a 630 Credit Score?Looking at the external factors first, you’ll find that interest rates are the lowest that they have been for more than 30 years. They have been held down by the Federal Reserve in the hope that the housing will start to move again. The result has been very spotty sales across the country. There are some areas in the West where older single family homes and condos are moving, while there are other areas of the country where only new building is being financed and whether owners are found for the homes is another story.

This is again because the Federal Reserve has held down interest rates.

This has resulted in some markets, such as the Northeast and some areas in the Southeast, where homes are moving. Even buyers with a 630 Credit Score are purchasing homes because banks actually look beyond the credit score when deciding whether to grant a mortgage.

A 630 Credit Score, in fact, is only one of several factors that banks or credit unions consider when they grant mortgages. Some of the other items include:

  • Employment: The length of time you have been employed or you and your wife have been employed has a great deal to do with your mortgage prospects. If, for example, you received your new job last week, after a year looking for work, then you would likely not receive serious look as a good mortgage risk until you had worked at the new firm for several quarters and your income would cover your mortgage payment.
  • Stability: Even with a 630 Credit Score, the lending institution looks at a number of factors in granting the loan. These include your stability within the community; within your employment, even within local institutions such as the Rotary or other civic groups.
  • Years in the community: Believe it or not, the length of time you have lived within a community can have an effect on your ability to receive a mortgage from a bank, even if the institution is headquartered elsewhere as the local branch will know you.
  • Attitude: This is somewhat of an intangible but it does give bank officers a chance talk with you and ask you questions about your savings habits; your attitude toward money in general; how you feel about the community; how you feel about local merchants; what the school system means to you.

Some of this information may seem a bit off-the-mark, because it is not. You see, while a 630 Credit Score is excellent, it is only one part of the equation that marks you as a good candidate for a loan or not. For example, if you have lived in the community all of your life and have joined local community groups that support the schools or support the town, in general, you are setting an example as a person who is grounded in the community and to whom a mortgage would be a good investment. Indeed, the bank might jump you over others who are in line because of one simple reason, they know you have a commitment to pay it back.

Is a 630 Credit Score Bad?

February 25, 2013

This is another of those questions that can only be answered with the two words: “It depends.” For example, it depends:

  • On whether you had a 780 score a year ago and today it’s only 630 because of your spending habits.
  • On whether the 630 is up only 10 or 15 points because you’ve managed to pay down a couple of large bills and have continued to pay on them, while paying only small amounts on other bills and pushing still other bills off into the future. It’s really not a true reading.
  • On whether you have taken stock of what you have to cut out of your budget, you have cut it out and are living within your means, meantime, paying off any large bills or loans that you owe.

Is a 630 Credit Score Bad?Only in the last case can you really call a 630 Credit Score a good score because if you are taking the steps outlined, as well as  putting a bit aside for future emergencies because it shows you are taking responsibility for your debt and paying it off. It also shows that you can commit to a budget and live within the budget, as you try to put some aside for emergencies.

Of course, the 630 Credit Score could be the result of your “finding financial religion” as you realize that the only time the phone seems to ring is at dinner time, before bedtime and early in the day as people remind you that you owe this much to that bill and that much to another. Getting the bill collector calls off your back is a great incentive to want to have the calling stop as you agree to work with them to pay  off what you owe.

Sometimes, you find that you owe far more than you thought and trying to pay something to everyone is exhausting. In this case, sitting down with a professional budget planner or agency that is willing to work with you to not only negotiate your loans down to a manageable level but to put a light at the end of the tunnel (you know that after four years your bills bill be gone) are wonderful incentives to making your 630 Credit Score a strong number.

Indeed, as noted, just a year or more ago,  you may have had a credit score in upper 480s  or low 500s and, after working to pay down what you owe, even with a loan repayment firm, you are finding that the result is the 630 Credit Score. Now that is a score one can be proud of,  while the others with higher credit score are really not in good shape, now, are they? Their high credit scores are falsely inflated views of their spending habits.

How these debtors handle their debt from now on will determine whether they retain their high credit scores (the chances are good they won’t) is actually the key to determining their creditworthiness in the future and whether their credit scores are worth reports in which they appear.

Is 630 a Good Credit Score?

February 25, 2013

Credit and credit scores have been known to keep people up at night; cause extreme headaches and nausea, as well as sending people shrieking into the night. Many people believe it is their credit score that is the determining factor in credit, however, it is actually a far wider topic than that.

Is 630 a Good Credit Score?Did you know that a 630 could be considered a bad credit score while a 750 might now be considered as creditworthy? The reason simply is this: how did the consumer obtain the credit score in the first place.

Let’s say you have two consumers, each making about $65,000 per year, and each having a couple of credit cards, a car loan, a home loan and various other sundry costs that keep them hopping.

Now, let’s say that consumer number one decides to pay a little to this credit card,  wait and pay his home loan a little late, while he pays his car loan and car insurance late, while he is still trying to obtain other credit cards with which to “pay” for some of the other bills that he has run up, is he a good credit risk and is his 750 a good credit score? Or, is he acting like a dam, just holding back the inevitable lake of bad debt that will flood him out?

Now, take consumer number two. He knows he is in trouble and he goes for some debt counseling with a local community group that helps him determine a budget under which he can live and eat and pay his credit loan down fairly quickly. He also knows that if you were to look at his credit score right now, it’s probably in the low 500s, but he has his secret weapon, his budget and the willingness to stay the course.

Now, let’s look at these consumers a year from now – each has a 630 credit score – whose is the better score? By now, consumer number one is in real trouble as he is in over his head. He has probably or is considering walking away from some of his credit card debt and, possibly, he is also looking at turning his fancy car lease into a monthly rail pass. His home may be in danger of foreclosure and all the extra credit cards are just useless pieces of plastic because he cannot use them.

The second consumer, on the other hand, has lived within his means, concentrating on paying off his credit card debt; bringing his car loan back up to date and ensuring that his car insurance is up to date and that his other recurring debts are paid every month so that now his 500  credit score of the year before is up to a 630 credit score.

In the second case, the consumer who has taken his economic life and responsibility in hand and has decided to work on paying debts has a 630 credit score that means something and which can be used as the basis of new responsibility in the future.