Demystified Improvingcredit

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No Nonsense Guide to Improving Your Credit

Understand thebasics and learn howto improve yourcredit score.Improving or rebuilding credit is animportant step toward giving yoursel abetter fnancial li e. When you improvecredit (whether rom good to excellent or

rom poor to good credit), you may fnd iteasier to get a home loan or other fnancing.Plus, you may quali y or lower interest ratesand lower mortgage payments.

I you have less-than-per ect credit, youllbe happy to know that its not as di fcultas you might think to repair bad credit.Well help you understand the basics andshare ways to improve credit scores.

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The goal o improving your credit score, rebuilding credit ormaintaining good credit is to give lenders, such as your bankor your home loan company, con dence that you will makeyour loan payments on time and will pay back what youborrow. To decide whether or not you are a good credit risk,lenders usually look at the seven actors below. By working onthese key points in your li e, you can start down the path tobetter credit or bad credit repair.

IncomeLenders want you to have a steady income every month

rom earnings, commissions, investments, rental paymentsand other sources, such as government bene ts or alimony.They also look or a stable work history, which generallymeans that you have been working steadily or the pasttwo years.

AssetsAssets are things you own that have value. Lenders wantyou to have assets that are liquid, or easy to turn intocash. This includes savings, investments, retirement undsand cars.

Liabilities Liabilities are debts, including home loans, equity home loans,credit card balances, car loans, student loans and so on.The amount you owe isnt so important on its own, butlenders are very interested in how your debts compare toyour income, as discussed below under Debt-to-Income Ratio.

Other Financial In ormationLenders also look to see i you have any situations thatcould make it hard or you to make your loan payments,such as lawsuits, collection activity, recent bankruptcy orproperty oreclosure, obligation to pay alimony or childsupport, or being a co-signer on another loan.

Payment History Your credit score can be hurt i you pay late just once by 30days or more, whether its on a home loan, a credit card, acar loan or other bills. Starting now to pay your bills on timeis a great way to maintain or rebuild your credit.

Credit ReportsLenders will look at your credit reports, which arecreated by the three national Credit ReportingAgencies (CRAs):Equi ax, Experianand TransUnion.These reports include details on your credit accounts andin ormation on your payment history.

Debt-to-Income RatioLenders compare your monthly debt expenses to yourmonthly income to get this number. For example, i yourgross monthly income is $3,500 and your total monthlydebt payments total $1,000 then your debt-to-income ratiowould be 29% (1,000 3,500 x 100).

In general, lowering your debt-to-income ratio can helpimprove your credit score and help you quali y or a homeloan with better terms.

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What actors can improve credit?
http://www.equifax.com/http://www.experian.com/http://www.transunion.com/http://www.transunion.com/http://www.experian.com/http://www.equifax.com/


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Do you need help improvingor rebuilding credit?

Rebuilding credit begins with recognizing that youre introuble. I six or more o the warning signs below are true inyour li e, then you may want to start working on improving

your credit. You only pay the minimum amount due on

your credit cards each month You make late payments or sometimes cant

make a payment You add more to your credit card balances

than you pay each month You rarely i ever see your credit card balances

go down

You dont know how much you owe, total,between your credit cards and other loans You apply or new cards but are at or near

your credit limit on existing cards You pay or necessities such as groceries, gas

or insurance with credit cards or cash advancesinstead o cash

You tap your savings to pay your credit cardbills and other debt or you have no savings.

You eel anxious or stressed when using yourcredit cards.

Lenders may also consider you to have less-than-per ect credit i

When you have less-than-per ect credit, lenders eel less

con dent that you will pay back the money you borrow.They o set a potential loss by charging a higherinterest rate.

Improve Your Credit and Enjoy the BeneftsWhen you have good credit, you may nd it easier to quali

or loans and lower interest rates, since lenders will consideyou a lower risk. Lenders gain con dence when you have a:

So take heart: There are ways to improve your credit, makinyou more likely to quali y or loans with lower interest rateSee the tips to improve your credit on the next page and geton the road to bad credit repair.

Your income varies signi cantly from monthto month

Youve had credit problems in the past You owe a lot of money compared to

your income

Nine warning signs o less-than-per ect credit.

Steady income High credit score

Good credit history Relatively few debts


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Less-than-per ect credit lowers your credit score, whichusually means your FICO score www.my co.com, arating system developed by Fair Isaac Corp. Lenders,including home loan companies, look at your credit scorewhen deciding whether or not to lend you money andhow much interest to charge. When you repair bad creditand/or raise your credit score, lenders are more willing to letyou borrow money and are more likely to charge a lowerinterest rate.

Rebuilding Credit: First Steps

Rebuilding Credit: Check Your ReportsChecking your credit reports rom the three CRAs can helpyou see why you may have less-than-per ect credit. You can

nd out how many credit accounts you have open, what yourbalances are and i you have any negative marks, such as latepayments. I you see any errors, contact the credit bureauimmediately to have them corrected. This could help improveyour credit score.

You can request a ree copy o your credit report once every12 months by doing one o the ollowing:

Rebuilding Credit: Moving orwardTracking your spending is one habit that will help youkeep your credit and your overall nances in good shapegoing orward. Start by setting spending goals.

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Tips to Improve Credit ScoresLearn how to improve orrebuild your credit and get ontrack to lower interest rates and alower mortgage payment.

Visit Annual Credit Reportwww.annualcreditreport.com

Call 877-322-8228 Order a report by mail. You can download an

order form at Annual Credit Reportwww.annualcreditreport.com

Contact the individual CRAs:Equifax www.equifax.com

Experian www.experian.com TransUnionwww.transunion.com

To raise your credit score, start with these steps:

1. Always pay your bills on time

2. Work to pay off debt, dont simply move it fromone credit card to another

3. Keep balances low on all of your credit cards andother credit accounts, but dont stop using themaltogether. Ironically, having no balance on yourcards doesnt help improve credit creditorswant to see how well you manage using and pay-ing off your credit cards. To improve credit, try topay off at least what you spend each month.

4. Close credit accounts you dont need. Only applyfor and open new accounts when you reallyneed them.
http://www.myfico.com/Company/AboutUs.aspx?fire=4http://www.myfico.com/Company/AboutUs.aspx?fire=4


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Write down a budget with your monthly income and

expenses, rom biggies like your home loan to little things likeyour morning rappucino. Every day, record what youve spentso you can see when youve reached your budget limit.

Improving or Rebuilding Credit: Get a Helping HandThere are several trustworthy, ree or low-cost resources thatcan help you improve your credit. Here are some reputableorganizations:

Federal Trade Commissionwww.ftc.gov/bcp/conline/edcams/credit/index.html877-FTC-HELP (877-382-4357)

CRC-240, Washington, DC 20580Amerix Corporationwww.amerix.com/customers/home.aspx800-833-8628 8930 Stand ord Blvd., Columbia, MD 21045

National Foundation for Consumer Creditwww.nfcc.org800-388-22278611 Second Ave., Suite 100, Silver Spring, MD 20910

Experianwww.experian.com888-397-3742Attn: Consumer A airs, P.O. Box 9600, Allen, TX 75013

Equifaxwww.equifax.com800-685-1111Attn: Consumer A airs,P.O. Box 740241, Atlanta, GA 30374-0241

TransUnionwww.transunion.com800-888-4213Attn: consumer Disclosure Center,P.O. Box 1000, Spring eld, PA 19022

Bad Credit Repair Scams

Avoid companies that require a ee to help you repair bad creditMany o these companies will cost you a great deal o money,could involve you in raud and could leave your less-than-per ect credit in worse shape than be ore.

Here are some signs that indicate a company may be runninga bad credit repair scam:

It takes time to rebuild credit, and there are no shortcuts. Butwhen you take smart steps to repair bad credit history andpractice smart money management, you can eventually enjoythe bene ts o good credit, such as lower rates and lowermortgage payments.

The FTC Web site has additional in ormation about creditcounseling (http://www. tc.gov/bcp/edu/pubs/consumer/cred-it/cre41.htm)

Improving or Rebuilding Credit: Know Your ScoreOne step toward improving or rebuilding credit is actuallyknowing your credit score. Scores range rom 300 to 850.A score o 600 or less usually indicates less-than-per ectcredit and signals that you should work to improveyour credit.

Your FICO score is based on in ormation collected rom theCRAs: Equi ax, Experian and TransUnion. Some lenders useone o these three scores, while other lenders may use themiddle score. Thats one reason you should review all threecredit reports or errors each year.

They ask you to pay up front They dont explain how you can help yourself

improve credit for free

They say you should not contact a CRA yourself They suggest that you create a new creditidentity using an Employee Identi cationNumber (EIN) or Individual Taxpayer Identi ca-tion Number (ITIN) instead of your SocialSecurity number. This is illegal.
http://www.ftc.gov/bcp/conline/edcams/credit/index.htmlhttp://www.ftc.gov/bcp/conline/edcams/credit/index.htmlhttp://www.ftc.gov/bcp/conline/edcams/credit/index.htmlhttp://www.ftc.gov/bcp/conline/edcams/credit/index.html


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To decide whether you have good or less-than-per ect credit,lenders review your credit report and evaluate your:

Understand credit reports to help monitorand rebuild your credit.As you read your credit report and work to improve yourcredit, keep these important points in mind:

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Less-than-per ect credit?Keep tabs on your report

Your credit report can show youwhere you are today and helpyou identi y steps to improveyour credit score.

1. Your payment history includes current, openaccounts as well as paid-o or closed accounts.

2. Bad credit repair doesnt happen over night.Negative credit in ormation can have an impact

or years. Paying in ull doesnt necessarily remove

a particular entry.3. The good news about rebuilding credit, though, is

that positive in ormation, like timely home loanpayments, usually stays on your report as long itsbeing reported to the CRAs.

4. Credit and collection accounts remain or sevenyears rom the date o the last entry.

5. Court records (such as tax liens or othermonetary judgments) stay on your report orseven years rom the date fled. Check with theCRA or exceptions, such as Chapter 7 and 11bankruptcies, which remain or 10 years, even i dismissed or discharged.

Credit Character How responsible you are withcredit obligations. For instance, do you make yourhome loan payments on time every month?

Credit Capacity Your ability to take on a certainamount of debt, such as a home loan, withoutoverextending yourself

Credit Capital The nancial assets you have topay off debts

6. The balance reported on each account listedshould be the balance as it was on the date thelender reported this in ormation to the CRA.

7. I you start an investigation that leads toavorable changes or deletions to your credit

report, you can ask that an updated report besent to any lender who received the older versionduring the past six months and to any companythat received your report in the last two years oremployment purposes.

8. When a lender checks your credit report (calledan inquiry), it could have a negative impact onyour credit score. Having too many inquiries canmake it look like you are trying to open multiplecredit accounts and are possibly taking on toomuch debt. However, while shopping or a homeloan, you may give multiple lenders permission topull your credit report. As long as these inquiriesare made within a 45-day period, they will onlycount as one inquiry. When a company reviewsyour credit report to see i they can make you apre-approved or prequalifed o er, this doesnot count as an inquiry.


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Monitor your reports as you improve your credit.As you work to improve your credit, you may want to checkyour credit report more than once a year. That way, you canmake sure in ormation stays current and correct, which notonly helps keep your credit score high but helps keep your

nancial identity secure, too.

A ter receiving your one ree report every 12 months romeach CRA, youll pay a ee or any additional reports requested unless youve been turned down or credit (such as a homeloan) within the past 60 days. To help you, each CRA has amonitoring program that will alert you to major changesin your report, or a monthly ee. You can also request yourcredit score or a ee set by each reporting agency.

Dispute errors to raise your credit score.Mistakes can pop up in your credit report. Correcting themis an important part o rebuilding your credit. To challengeand correct these errors, and improve your credit rating, rstobtain your credit reports by one o the methods listed above.Closely read each report, including personal in ormation suchas your name, address and Social Security number. I you nderrors, you can correct them either online or by mail to helpimprove your credit rating.

Dispute an Error OnlineI you order your credit report online at Annual Credit Report(www.annualcreditreport.com) or rom one o the CRAs, youcan correct the report by ollowing the instructions to le anonline dispute.

Dispute an Error by MailI you order your credit report by mail, then you must writea Dispute Letter to have errors corrected and help repair badcredit history. Heres what to do:

1. Include your personal in ormation, such as your Social

Security number and date o birth.2. Be speci c about which item is wrong and why. For

instance, i a credit card account is shown with a zerobalance but the status should be closed, say so.

3. Make a copy o your dispute letter and any additionalin ormation you are sending, such asa statement rom the creditor supporting your claim.Keep these copies or your records.

4. Make a copy o your credit report, circle the entry that isin error and attach your dispute letter and any additionalin ormation you are sending.

5. Send your letter by certi ed mail and ask or a returnreceipt to be sure it arrives.

When the CRA receives your letter, they will ask the creditor inquestion or an explanation. The creditor has 30 days to respondI the in ormation you are questioning is wrong or cannot beveri ed within 30 days, the item will be deleted rom yourreport, which can help to improve your credit. I the in ormatiois later ound to be correct, it will be put back on your report.


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Dispute an InquiryWhen you apply or credit, such as a home loan, you usuallygive lenders permission to review your credit les. Creditorswith whom you have open accounts also usually can reviewyour credit report. I lenders/creditors make too manyinquiries, this may impact your credit history.

I you think an inquiry is incorrect or happened withoutyour permission, you can dispute it to help improveyour credit.

Taking these steps can be an important part o your plan toimprove or repair bad credit.

Add Positive In ormation to Improve Your CreditAnother way to improve or rebuild your credit history isto add positive details to your report. For instance, i younotice that an account you have in good standing is noton your report, you can request that the CRAs add it. Justrealize that not all CRAs will add in ormation that doesntcome rom their subscribers (lenders and creditors).

Rebuilding Credit Can Mean Lower RatesThere are two main reasons you should improve or repair badcredit. First, rebuilding credit makes it easier to get loans o all kinds, since lenders are more likely to see you as a goodrisk. For the same reason, when you improve your credit, youmay quali y or lower rates on many types o credit accountincluding your home loan. And that can save you hundreds,even thousands o dollars on interest charges over thelong term.

Write a dispute letter to the CRA Include a copy of the credit report. Circle

the inquiry you are questioning and writeunauthorized by it

You can also call or write the business or personwho made the inquiry to let them know you havewritten to the CRA


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Rebuilding credit isnt always easy. At Full SpectrumLending, a division o Countrywide Home Loans, we applaudyou or taking the rst steps to raise your credit score. I youre not amiliar with us, please take a moment to readon and see why we can be a reliable resource as you work toimprove your credit.

Less-than-per ect credit?Nobody is per ect, and having less-than-per ect creditshouldnt stop you rom being approved or a home loan.At Full Spectrum Lending, we specialize in mortgages orpeople who dont necessarily have per ect credit, and wereproud to say that 4 out o 5 applicants are approved! Sowhether you need more fexibility due to sel -employment,high consumer debt or a less-than-per ect credit history, theFull Spectrum Lending experts can help you nd the righthome loan solution or your needs.

Were experts in less-than-per ect credit.Most lenders ocus on the faws in your credit history. We

ocus on your needs and work with you to nd a home loanthats right or your unique situation. We understandthat bad credit is temporary, and our specially trainedconsultants are ready to help you on the road to bad creditrepair with a debt consolidation loan, cash-out re nance or

rst home loan that suits your individual needs.

Home loans tailored to your needs, not ours.At Full Spectrum Lending, its not about us. Its about youand how we can help you meet your needs today andtomorrow. Our home loan consultants will talk with youone-on-one to learn your story and help nd a solutionthat addresses your needs, whether you need a cash out

re nance to cover unexpected expenses, need to consolidatedebt into a single, convenient monthly payment, need tolower your monthly expenses or need a new home loan.

How Countrywides Full SpectrumLendingCan Help You

On the Way to Bad Credit Repair

When youre looking or ways to im-prove credit, you need someone youcan count on. Thats CountrywidesFull Spectrum Lending.

Call Countrywide Home Loans Tod1-888-265-3662


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Resources to help you monitor your credit.Countrywide is proud to team up with Experian too er you discounted prices on important credit and identityprotection products, including:

3 Bureau Credit ReportGet one easy-to-compare report that includesin ormation rom all three national CRAs, plusyour Experian credit score. Visit theCountrywide Credit Center.

Countrywide CreditGuardMember CenterWhen you become a Countrywide CreditGuard member your bene ts include: one 3 Bureau CreditReport and Experian credit score; daily monitoring o your Experian credit le, plus e-mail alerts; unlimitedaccess to your Experian credit report and credit score;access to raud resolution representatives.

Remember, you can request a ree copy o your creditreport once every 12 months by doing one o the ollowing:

Were a home loan lender you can trust.Full Spectrum Lending is a division o Countrywide HomeLoans, member o the Countrywide amily, Americas #1Home Loan Lender.^ That means you have the expertise,resources and technology o the nations largestindependent residential mortgage lender working or you.

And it means you have a wide range o home loanoptions to meet your needs, including the Credit Repairmortgage and the Credit Comeback LoanSM both speciallydesigned to help you improve your credit situation.

Pair that with home loan consultants who are experts innding mortgages or people with not so per ect credit, and

you have a lender you can count on as you work to rebuildyour credit and regain a sound nancial uture.

Visit Annual Credit Reportwww.annualcreditreport.com

Call 877-322-8228 Order a report by mail. You can download an

order form at Annual Credit Reportwww.annualcreditreport.com Contact the individual CRAs:

Equifax www.equifax.com Experian www.experian.com TransUnionwww.transunion.com

Make the most o homeownership!Learn about your home loan choices,the benefts o equity home fnancingand how rebuilding credit can lower inter-est rates and mortgage payments. CallCountrywides riendly, knowledgeableconsultants today at 1-888-265-3662

or a no-cost, no-obligation discussion.

Based on the number o applications submitted and approved.

^ As ranked or 2005 by Inside Mortgage Finance (Jan. 27, 2006). 2006

Countrywide Bank, FSB and Countrywide Home Loans, Inc. are EqualHousing Lenders. 2007 Countrywide Financial Corp. Trade/servicemarks arethe property o Countrywide Financial Corporation and/or its subsidiaries. Allrights reserved. Full Spectrum Lending is a division o Countrywide Home Loans,Inc. Countrywide Home Loans, Inc., 4500 Park Granada, Calabasas, CA 91302:Arizona Mortgage Banker License Number BK8805; Licensed by the Department o Corporations under the Cali ornia Residential Mortgage Lending Act; Georgia Reg.#5929; Illinois Residential Mortgage Licensee (# 0139) by the O ce o Banks andReal Estate, Mortgage Banking Division, 310 South Michigan Avenue, Suite 2130,Chicago, IL 60604, (312) 793-1409; Massachusetts Mortgage Lender License No.ML 1623; Licensed by the New Hampshire Banking Department; New Jersey (818)313-6526, Licensed Mortgage Banker, NJ Department o Banking and Insurance;Licensed Mortgage Banker, NYS Banking Department; Registered with the Penn-sylvania Banking Department; Rhode Island Lenders License. Countrywide Bank,FSB, 1199 N. Fair ax St., Suite 500, Alexandria, VA 22314: Minnesota loans willbe made by Countrywide Bank, FSB through its home loan nancial centers. Thisis not an o er to enter into an interest rate lock-in agreement under Minnesotalaw. Some products may not be available in all states. This is not a commitment tolend. Restrictions apply.
http://www.countrywide.com/CreditCenter/default.asp?FinType=1http://www.countrywide.com/CreditCenter/default.asp?FinType=1http://www.countrywide.com/CreditCenter/default.asp?FinType=1http://www.countrywide.com/CreditCenter/default.asp?FinType=1

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