How to Increase a Credit Score

Credit scores are one of the largest factors that lenders use in evaluating whether or not to lend money to a borrower. Credit scores are designed to measure the risk of someone defaulting by taking into account various factors in a person’s financial history.

If you are considering purchasing a Massachusetts home one of the things you want to be sure of is the accuracy of your credit report.  The economic down turn of the last five years has vastly changed the mortgage landscape all across the country.If you ask any mortgage broker they will tell you that things have changed in the mortgage industry on a monthly basis. Given the increase in foreclosures and short sales lenders have increased their standards when evaluating the potential for default of every borrower.One of the tools that lenders use to evaluate the borrower to repay a loan is what’s known as their FICO score. The FICO score was developed by the Fair Issac Corporation. The company was founded in 1956 and their scoring programs are often used to assist lenders in managing credit accounts, detecting credit fraud and automating lending decisions. The FICO score is a standardized approach that helps lenders deliver decisions on loans in an efficient manner.

FICO scores can range from 300 to 850 with 850 being the maximum possible score. According to the FICO scoring system there are five factors that determine a borrowers score. Using these guidelines can help you improve a credit score!

• 35% — A borrowers payment history carries the most weight – Late payments on bills including  a mortgage, credit card or automobile loan, can cause a consumer’s FICO score to go down. Paying your bills according to the contract you signed will over time help improve a consumer’s FICO score.

• 30% — The borrowers credit utilization – The ratio of current outstanding debts such as credit card balances to the total available revolving credit ( your credit limit). You can improve your FICO score by paying off  debts and lowering your utilization ratio. The closing of existing revolving accounts will typically adversely affect this ratio and therefore have a negative impact on your FICO score.

• 15% — The length of credit history – As your credit history gets longer, assuming you pay your bills on time, it can have a positive impact on your FICO score.

• 10% — The types of credit used (installment, revolving, or consumer finance) – There is some credit given to having a history of managing different types of credit.

• 10% — A recent search for credit or amount of credit obtained recently-  If you have multiple credit inquiries as a consumer seeking to open new credit, such as credit cards, retail store accounts, or personal loans, it can hurt an your score. Applying for lots of new credit in a short period of time is also viewed as risky and can cause a drop in an individual’s score. What should be noted however is that if you are shopping for a mortgage or auto loan over a short period of time you should not experience a decrease in your scores as a result of these types of inquiries. So if you are buying a home and apply to multiple lenders and they all do their credit checks you are not supposed to be penalized.
• 
  

FICO scores do not take into account a borrowers salary, employment history, where they work, rental agreements, child support or other such obligations or interest rates on any current loans.

Generally speaking a credit score that is over 720 is often considered an excellent credit score.  A score of 680 – 719 is considered good. A score that falls between the range of 620-679 will usually make the lender scrutinize the file further. Having a score that falls between 585-619 will typically disqualify you from getting the best rates. A score below 584 will make many lenders question whether or not they want to do business with you.There are actually three companies that report credit scores to lenders. They are Equifax, Experion and Transunion. The scoring of these agencies can often vary quite a bit. Each of the bureaus collects different information on the borrowers which can change the final score. Given how the credit scores can differ from the various agencies if you are falling on the edge of one of the credit ranges it may be prudent to apply to more than one lender. For example if you had a score of 675 at one agency it is quite possible you could be 700 somewhere else which could give you a better rate! It should be noted that the credit scoring model was slightly altered in 2009 and could effect your score either up or down by 20 points.In the new model credit problems and issues will be ranked according to number and magnitude more specifically than before. The new FICO scoring system also focuses less on how many accounts a borrower has and more on the amount of balances carried.

The statistical models that are used for generating credit scores are subject to federal regulation. The Federal Reserve Board’s Regulation B (implementing the Equal Credit Opportunity Act), expressly prohibits a credit-scoring model considering “prohibited biases” such as race,  national origin, sex, religion and marital status. The law also states that credit-scoring models must be empirical and statistically sound. In addition, if a borrower is denied a loan based on credit, the lender must state to the specific reasons for the denial. A statement that the person did not score high enough is not acceptable. Thee reasons for denial must be specific. For example  there were too many late payments of 60 days or longer.So how does one go about improving their credit score to get the best rates that lenders offer? The answers are actually pretty simple!

• Pay all of your bills on time every month.

• Pay off all of your existing debt.

• Unused credit cards should not be closed. This can sometimes lower your credit score.

• Do not open a bunch of new credit card accounts in a short period of time.

A few years ago it was not uncommon to hear of mortgage brokers or credit repair companies doing what was known as “doctoring” a persons credit.

A major portion of the FICO credit score is set by the ratio of credit used to credit limit.  What was happening was they would increase the score by simply increasing your credit limit. Some of the credit-repair agencies, for a fee, would report to the credit bureaus that they have opened an account with a high credit limit. The customer could not actually use this account but it would improve the customer’s FICO credit score due to lowering the balance-to-credit-limit ratio. This is no longer allowed!When you are starting your home search and getting your pre-approval from a lender one of the other things you should do is get a copy of your credit report from each of the three report bureaus. As a consumer you are allowed to get one free credit report each year from Equifax, Experion and TransUnion.With this knowledge is hand you should be well armed to position yourself for the best mortgage rate possible and increasing your credit score!

If you are thinking about selling your home or wonder how much your home is worth, contact me. If you have friend and family member that is interested in buying or selling thier home, please keep me in mind!                 cell: 302-290-1375 office 302-631-1648 e-mail pam.covey@foxroach.com

Low Cost Home Improvements When Selling Your Home

In a very competitive Tri- State Country Real Estate market one of the things that is vital to your success is how well your home shows in relation to the rest of the inventory for sale. There are quite a few simple things that you can do to improve your chances and maybe put a few extra dollars in your pocket at the same time. Maybe you are not even thinking about selling your home right now. When the time comes, however these low cost improvements could make a difference. 1st impressions are always important so you want to make sure the entry to your home shines. As the buyer approaches the front door the last thing they want to see is an old worn door with cob webs hanging from above. Most buyers are going to assume right of the bat if the home is not well maintained on the exterior, the interior will not be much better. The Entry Way Painting the front door or even replacing it if it is beyond paint can make a real difference. A nice shiny door set always stands out as well. If you have vinyl siding and you have not cleaned it in a while mildew, dirt and grime can accumulate. Giving it a quick spray can surprisingly make a big difference in the appearance. Plant Some Color When selling a home, planting some flowers around the entry can really make your property come alive. Choose a variety of colors that really stand out. Adding a few potted plants if you have a covered entry or a large enough stoop is always a nice touch as well. Fix Up The Baths While remodeling a bath is one of the highest returning home improvement projects it may not be in the budget at the moment. If however, you still have your gold toilets and sinks from the 70's it may be time to let go and move on the something that 99% of the population would like better. Have a gold shower too? There are lower cost alternatives to ripping out the shower. There are specially made bath fitters that are designed to be put over a shower. New faucets are another lower cost item that can make a difference. At the moment silver/nickel is back in and brass is less popular. Changing towel ranks, toilet paper holders and shower heads are also nice touches for short money. Paint Those Walls Painting is one of the cheapest most effective improvements you can make in your home especially if the colors are not neutral to begin with. I know you love the pink entry way and purple bathroom but most buyers will not. I know what your thinking painting is cheap...the buyer can just do it themselves. Most people think this way, however, there is a large part of the population that does not have any vision and will not be able to picture what it will look like until it is done. There are many home home buyers that have looked at a property and come back later after a home improvement was completed to find themselves stunned about how the home has changed. Painting your home off white or if you want to be slightly more bold in earth tones, is the best way to go. When selling your home all decisions should be done to appeal to the masses. Address the flooring A little more expensive but one of the better returning investments especially if you are still hanging on to the orange shag. Even if you have more modern carpet but just don't have enough in the budget for new carpeting, a good cleaning by a professional can help out dramatically. The same can be said for wood floors as well. A good scrubbing can go a long way.   Clean Your Windows/Treatments Cleaning your windows can really spruce up your home especially if they have not been done in a while. A bright home always shows far better than a dungeon. Removing heavy drapes and curtains can help as well, especially if they are out of date. It is far better to have nothing than to have a pattern that was popular in the 80's. Change Old Lighting Lighting is one of those things that are subtle but believe me a buyer will notice if the lighting is really dated. There are some great lights that can be purchased rather cheaply in many lighting stores especially if they are looking to restock their shelves with the latest model. Even little things like upgrading to brighter bulbs can help. Most home buyers are turned off by dark unlit rooms. Although a little more expensive to add, recessed lighting can really change the level of lighting in a room. Recessed light work really well in kitchen and baths. Declutter Your Home This one can really go a long way. Buyers like spacious rooms that they can envision their own belongings in. Getting rid of things that you know you will not be taking with you can really change the appearance of your home. Hold a yard sale for those items that still hold value. Have other things you know you want to take with you but know they spoil how well your home shows? Get a PODs (portable storage on site) or even consider putting your stuff in a short term storage facility. Not every improvement has to be expensive. Sometimes it is the small things you do that make the biggest difference in a buyers mind. If you are thinking about selling your home or wonder how much your home is worth, contact me. If you have friend and family member that is interested in buying or selling thier home, please keep me in mind!                 cell: 302-290-1375 office 302-631-1648 e-mail pam.covey@foxroach.com

Prepare Your Home For Sale

Prepare Your Home For Sale

Whenever you are selling a home, accomplishing the goal of making your home stand out from the rest of the inventory for sale is a very important consideration.

Most Real Estate markets around the country are down and the competition is fierce for a buyer pool that has shrunk dramatically. Presenting your home in the best light will give you a leg up on the competition.

"Curb appeal" is often a catch phrase that is tossed around in Real Estate circles. 1st impressions are critical! Most buyers will find your home online and if your Realtor has done a good job with photography your home should look pretty decent.

Don't disappoint them by leaving your yard look like hurricane just took place!

 Here are a few quick pointers for your homes exterior to help create a more timely sale:                                                                                            

• Clean up all debris from this past winter including any tree limbs, branches, and left over leaves.
• Clean the driveway and walkway of any sand and other debris.
• Pay careful attention to have all your landscaping beds raked and weeded out.
• Trim your bushes if needed. Pay attention to keeping them a few feet back from the home allowing for proper ventilation.
• Consider planting some hearty Spring flowers that have lots of color.
• Assess your driveway and get it seal coated if it looks old and worn. Seal coating really does wonders to  give your home a new and appealing feel.
• Clean out your gutters. You do not want your gutters looking that could harbor creatures from the black lagoon.
• Hose down your deck and consider seal coating the surface if needed.
• The entry way to your home should sparkle! A fresh coat of paint on the front door always looks great. Make sure you remove any old cob webs.
   
• Consider a few potted plants at the entry with some nice flowers.
• Use a garden hose and spray down any areas of your siding that may have mold or mildew build-up.

 Just as important is how your home looks on the inside. The properties that are punished the

most in a challenging market are the ones where the buyers have to think about investing their time and money dealing with a previous sellers issues.

Trust me when I tell you that when you and I estimate the cost to repair an item is $500, the buyer is estimating $1000 in their mind. You will not win this battle.

Here are some easy things to consider for your homes interior:

                                                                                                                                                     

• The 1st thing you should consider is taking any unnecessary possessions and remove them from your home. You want to make your home feel as large and airy as possible. De-cluttering old furniture, boxes, and nick knacks go a long way in making a home presentable. I would consider a local storage center in your area for these things, as it is well worth the investment.
• If you can not find out local storage facility I would consider renting a storage unit from PODS(portable on demand storage).
• Next on the list should be a major Spring Cleaning. The bathrooms and kitchen should be spotless! These are the rooms that buyers will pay the most attention to. No big mystery, as these rooms are the most costly to upgrade.
• Clean out all your closets. Buyers are always looking for closet space. Having your closets neatly organized is important.
• Wash down all your windows. Homes always show better when there is plenty of natural light. Don't let years of grime and dust get in the way.
• Consider touch up painting any high traffic areas where scuff marks and worn paint are easily visible.
• Always paint or bleach any old stains away. For example if one of your kids took a shower without the curtain fully closed and there is a large stain in the kitchen ceiling below get it fixed. For one it looks awful and two buyers are going to assume you have a plumbing issue.
• Clean out and organize your garage. A spacious garage will be a consideration for many home buyers.
• In areas of the home where natural light is not the best make sure you have lamps with higher watt bulbs.
• Clear your kitchen counters completely of everything but the bare bones essentials.
• Clean all faucets,mirrors,lights, and ceiling fans.
• Re-caulk any tubs, showers, sinks, or tile work that has loose grout.
•    
• 

Above all else you want to take your emotions out of all the decision making when it comes to getting your home "staged".

Work with your Realtor and make it a team effort. Remember the goal is to get your home SOLD!

You may be taking pride in your PURPLE bathroom but the next buyer most likely will not.

While you have lived in your home for years and enjoy the way it looks a buyer has not.

If your Realtor does not have much experience is setting the stage for your home consult a professional stager.

Here is an excellent video that illustrates many of the points I have mentioned in this article.

Getting your home to look like something out of Better Homes and Gardens is certainly going to go a long way in getting to the closing table.

Don't forget though that all this effort will be for naught if you do not price your home properly and pick a top producing Realtor to work with. In a challenging market these are the two most important decisions you will be faced with.

If you are thinking about selling your home or wonder how much your home is worth, contact me. If you have friend and family member that is interested in buying or selling thier home, please keep me in mind!                 cell: 302-290-1375 office 302-631-1648 e-mail pam.covey@foxroach.com