Improving My Credit Score of 527 by Summer of 2009

Reader Question: "Right now my credit score is 527 which has fallen because of late payments due to unexpected life changes. I have been working with a mortgage consultant who said if I continue to bring my payments back to good standing it will help me qualify for a good 'A' paper loan. I plan on purchasing a home after May 2009. Do you believe that is feasible? And how much can I bring my credit score up to by summer 2009?"

For readers who are not familiar with the terminology, an A-paper loan is one offered to the best-qualified applicants (high credit score, good debt-to-income ratio, etc.). This type of loan typically gets the best interest rate the lender has to offer. In other words, it's kind of loan you want. Like getting an 'A' on your report card.

The qualification criteria for getting an A-paper loan is not set in stone and varies from one lender to the next. With that being said, the criteria are stricter today than they were a couple of years ago. This is mainly a result of the housing crisis. From what I've been reading lately, most lenders are reserving their best interest rate (their A-paper loans) for people with FICO credit scores in the 700+ range.

That brings us to your primary question. How much can you improve your score by summer of 2009? This depends on what all you do between now and then. But it's certainly within the realm of possibility. I've seen people increase their credit scores significantly in fairly short period of time -- I'm talking three or four months.

Here are some related Q&A sessions from our Credit Help Blog you might want to read:

• How long does it take to improve a credit score?
• How long does bad credit stay on your report?

Hope that helps. Good luck reaching your goal.

~Brandon