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Monday Mornings with Madison



Here’s some good news for this Monday morning: the real estate market has started to open up again and banks are offering their lowest mortgage rates in years. Many people are using this opportunity to refinance their existing mortgages or to close on new purchases but as we all know, financial expectations have changed over the last few months.

To qualify for a low rate, you now need to have a good earning record and a credit score of more than 700. Maintaining a high credit score has always been important, but it will be even more important in the foreseeable future as banks continue to scrutinize their risks. So let’s take a look at how you can improve your credit score.

First, get your report Before you can start working on your score, you have to know what it is and what it comprises. Annually, you can get one free credit report from the three main credit companies through  Avoid all the heavily advertised agencies that offer free reports because these companies are in the business of signing people up for expensive, long-term contracts.

Take a close look Print out your report and look it over line by line. If you see anything that’s not accurate — for example, a credit card listed that you never applied for — you should file a dispute by mail or online to have it corrected or removed from your report. (The contact information is included at the end of your report.) It may take up to 45 days for any corrections to be made and your challenge may in the end be rejected, but you have nothing to lose by trying.

Verify your unpaid claims Any unpaid claims on your credit report, no matter how old or how small they may be, will affect your overall score for a long time. If you find any such claims, write the listed collection agency a debt verification letter, in which you request proof that you really owe this money to them. Keep a copy and send your letter by certified mail. The collection agency has 45 days to respond to you. If you don’t hear from them in 45 days, send a copy of your original request to the credit bureau that listed the debt and ask them to remove it due to lack of proof. Most reputable collection agencies, however, will review your request and respond to it.

Resolve your outstanding debts If the outstanding debt is legitimate, you can send your creditor a “Pay for Deletion,” or PFD, letter. With this, you are agreeing to pay the debt if the creditor agrees to remove it from your report. This removal does not happen automatically even if you do resolve the debt, so make sure you get a guarantee.

Keep your credit card balances low  If you are maxed out on all your credit cards, your score will be much lower than if you have available credit. Experts recommend that you keep at least 70% in unused credit on each of your lines.

Pay on time Paying your bills on time will ensure that you avoid negative points from late payments. Make sure to check the due dates on each month’s bills, because credit card companies have lately been tightening or changing their due dates in order to maximize late fees.

Money often costs too much.  Ralph Waldo Emerson

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