How to increase my credit score
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I use a score monitoring service, and currently my 3 in 1 credit scores are showing above 600.
I’ve recently applied for an FHA loan and was declined. According to the bank, my credit and my score is averaging 591.
Why is this and what can I do to increase this up to 600? My banker said it would be very easy to fix and raise my credit score, but gave me no real suggestions.
I’m trying to buy a home soon so I really need to raise it. I’ll appreciate all the input I can get. Thanks!
P.S
I forgot to say that nowadays, you can get a FICO from Equifax & Transunion only. Experian no longer provides FICO.
It’s complicated…
The FICO scores we have access to are the generic version (they are also called FAKKO scores). This is the same with the scores you got from the monitoring service.
Even if you purchase a credit score directly from the credit bureaus, you would get non-FICO scores (probably Vantage score) that are on a different scale and even use different formula. There is no way to compare any of these to the FICO, and they are worthless.When you apply for a mortgage or auto loan, they get customized FICO scores that are specific to the type of loan you’re applying for. It weighs everything differently, and this is why you see different score. These customized FICO score may be different from you generic FICO, which can explain the difference between your 600 and their 591…
Just to throw more confusion into the mix, there are three versions of your credit report and FICO score for each credit bureau. A version weighted for car lenders, a version for mortgages, and a consumer version. You can only access the consumer version. Scores for the car version tend to be higher, while scores for the mortgage version tend to be lower, than the consumer version.
Minimum FICO score for a FHA loan is 620 and even that isn’t good enough to get approved. You need more like 640. I suspect it will be some time before you can get your FICO scores to that level. There really are not quick ways to increase your score. It take time.
As to how to raise your score:
If you’re carrying balances on credit cards in excess of 35% of your limit, pay off the cards. This will give you a score boost – but it may not be enough.It will also improve your debt to income ratio, another very important factor in qualifying for a mortgage – actually much more important than your score.
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