For every person who is on the market for a home mortgage loan and especially a home mortgage loan given the predicament of the subprime market, the greatest cause and effect task is to acquire the immaculate (near-about) credit rating. The most widely used is the FICO score. This score is an estimation of the risk associated with a borrower defaulting on the repayment of the loan based on several retrospective determinants as well as certain others like current income, profession and other assets etc. lenders scrutinize these scores by every detail to assess the credit worthiness of the potential borrower.

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The FICO score was formulated by the Fair & Isaac Co. which uses the credit background information of an individual supplied by what are known as Credit Bureau (i.e. Experian, Equifax and TransUnion). It’s also interesting to note that individuals have 3 separate FICO scores since the background information available with the three bureaus vary slightly from each others. Every consumer can avail a free credit report at the Annual Credit Report site. In order to get the FICO scores, consumers can visit the my FICO site (where they may have to pay for them or commit to a monthly monitoring service).

Many potential mortgage loan borrowers find it hard to access credit given the poor scores and credit ratings on account of a series of default on repayments or even other overdrafts such as credit card outstanding and the extent to which these outstanding amounts have been cleared. Essentially, these scores are compiled on the basis of history of outstanding payments, intensity of credit usage, time period of outstanding and cleared credit, credit shopping and the diversity of the various credit accounts such as loans, leases, mortgage etc. Credit Cleaning comes into the picture which in time accounts for and clears out all outstanding dues by making all necessary payments on time and regularly. Over a period of time, once you raise credit score and ratings, they improve as a result of the timely repayments of the debt(s). Credit Repair and credit cleaning identifies and erases any unfair or irregular information on the reports/ratings after verification of the apparent discrepancies. Despite the services available to raise credit score, it is essential for each individual to understand how credit repair work and to know what is on it.

The real estate lending industry over the years has grown on and even today thrives on the ratings and scores. Historically, the industry has adopted the practice of pooling mortgages with varying levels of risk/uncertainty into separate portfolios; each portfolio comprises of borrowers with a similar score. Hence it helps mitigate the probable loss (default on loan repayment) from high risk credit accounts bundled with low risk accounts into a single large portfolio. A definitive portfolio of accounts with similar risk tendency ensures better control on risk which translates into better performance on a whole.

In order to raise credit score and rating it has always been advised to understand both how the rating process works and how to read the final credit report. This enables the individual to point out errors in any past credit records which thereby can positively impact the final score. Such disagreements have to be submitted in writing to the concerned credit bureau which then verifies the same. Credit cleaning companies can help significantly increase credit score over a period of years by guiding the borrowers to make all repayments of the loan(s) on time or to better suggest an organized pattern to the individual to clear out all outstanding payments and maintain the ideal debt-to-credit ratio desired by lenders (typically below 30%).

Besides credit repair companies, there are also well recommended techniques for getting real assistance to credit cleaning and raise credit score are software programs that guide, generate and track the letters and correspondence with the bureaus in order to raise credit score. One such program is the Credit Repair Magic which does most of the tiring work like writing repeat letters for follow up, etc. This has been approved by the FTC because it is easy to use and costs a lot less than credit repair companies. It is also a fact that the FTC advices self-help as the best way to clean up your credit.

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