For the most part, a 620 fico score is now required for FHA, VA and Conventional loans. If a borrower is trying to raise their score to this level, here are some pointers. It is very difficult to erase or change the old, bad, credit history unless it is false. Therefore, they need to focus and creating a positive credit history going forward.
Ideally they should have 2 or 3 open, active, on-time lines of credit that report to the credit bureaus (cars, credit cards, student loans). The best and safest way to do this is by opening a secured credit card. You send the creditor money and then you can spend that money with the credit card (like a debit card except that they report to the 3 credit bureaus as a perfectly paid credit card).
There are several “no credit check, automatic approval” secured credit cards that can be found on www.bankrate.com (then click Credit Card tab, then “Select by credit type”, then select “Bad Credit”).
Having a family member add them as an authorized user would also work. If they already have credit, they should try to get their balance on the credit card under 35% of the max credit limit. Once they start getting ready to apply for their mortgage they should not have their credit run for 90 days prior to applying for the mortgage.
The best way to check your credit and dispute inaccuracies is by ordering your free credit report (www.annualcreditreport.com or 877.322.8228) and use the dispute form they give you. This will not count as an inquiry on your credit and you are entitled to one report per credit bureau, per year. The report is free but you will have to pay to see your Fico scores.
