Karen J. Church, of RE/MAX Integrity in Eugene, Oregon presents Part 8: Dealing with Credit Challenges.

Karen Church, your "Go To" gal at RE/MAX Integrity at www.eugenehomesgal.com discusses the question of "Dealing with Credit Challenges.".

Unfortunately, a person with a bad credit is often in this position because he or she lacks the discipline to pay bills on time. Of course, there are exceptions where unforeseen circumstances come into play, such as health complications, or loss of employment.

There are a few things that may be able to bring up your score so that you can secure a better interest rate on your mortgage loan.

Example 1: Distribute debt from revolving credit.

Our borrower, Mr. Jones, has a credit score of 664. He has five credit cards, but his Visa account is almost maxed out. His other four credit cards have relatively low balances. Mr. Jones moves par of the debt from the Visa account to the other major credit card accounts, thus distributing the debt more evenly over ht five cards. This changes the ratio of debt to available credit (which has a 30% impact on the overall credit score), and Mr. Jones successfully raises his credit score by 20 points with very little effort.

Example 2: Transfer outstanding balances to new accounts.

Our borrower, Mr. Smith, has only two credit cards, but both are pushing the limit of available credit. Mr. Smith opens two new credit card accounts, each with a credit limit of $5000. He transfers part of his existing balances to he new accounts. While he has acquired two new cards, that have no established history, the greater impact is the change in the ratio of debt to available credit.

Ultimately experts say that is the best to have one or three major credit cards, and no more than that. You should keep your balances as low as possible. If you have a credit account with a zero balance, do not close the account.

Instead, make a small purchase to the card shows up as an active account on your credit report and you will be awarded points for your long term credit history.

This information has been obtained through the Real Estate Lending Group. Be sure to contact me if you need further assistance. If you wish to get a free credit report go to www.annualcreditreport.com

Stay tuned for Part 9: Dos and Don'ts During the Loan Process.