Credit Problems? Know what you are up against!

1. Review, review, review!

- Credit agencies are legally obligated to give you a copy of your report, if you request it, once a year or anytime you are denied an application for credit. The first thing you need to do is get a copy of your report and find out what is holding you back from that prefect 850 score. You will want to get a copy from all three agencies (Equifax, Trans Union, and Experian) and compare them because they sometimes report things differently.

2. Find incorrect items!

- The first things to look for are items that you know do not belong to you. This could be a sign that someone is using your identity. If this is the case, file a report with the authorities and inform each agency of the situation.

- The second thing to check is the "Current Rating" of each tradeline. This section will show if the tradeline is current, as agreed, delinquent, or collection. If the status is incorrect you will want to have it updated. Be aware that you will have to show proof of any discrepancy.  

- Tax liens, judgments and bankruptcies also frequently go uncorrected. Check to make sure that if they have been satisfied, the date of release has been reported.

3. Pick you battles!

- Some collections stop reporting after a certain period of time. If you have a collection that has not been reviewed within the last 2 years, regardless of if it is correct or incorrect, leave it alone. If you dispute this item it will make old bad credit new bad credit.

- If you have a recent collection (inside of 2 years) try and negotiate the balance down and pay it off. Because collection agencies will add a fee to the balance, then resell it many times over, it is best to deal with it while the amount is still low. This is most prevalent with medical collections.

- If you come across a collection that has been sold over and over again you will have to work with the creditor and the credit agencies to straighten things out. A collection that shows multiple times will bring your score down.  

- Contact any creditor that has reported a late payment and ask them to remove it in good faith because you have been such a good customer. This won't work if you have a ton of late payments and possibly if you only have one but is never hurts to ask.

4. Credit Cards.

- Also know as revolving credit, these tradelines carry the most myths. The most important thing to know is to keep the balances below 50% and ideally below 30%. Just because you have credit cards does not mean you have good credit. If you cannot pay these cards down request an increased limit. Do not spend on that card.

 - It is a good idea to transfer balances from high interest cards to low or no interest cards because you will reduce your balance much faster. You do not want to take a bunch of cards that have low balances and consolidate them all on the same new card. Spread your debt out but try not to open too many new accounts at the same time.

- Try not to close cards before they are paid in full. There have been many times I see a card that has been closed, then paid off, but the balance remains on the credit report.

- Do Not close old cards with good payment history. It is a common misnomer that if you leave them open it hurts your score. This is untrue. First because the credit agencies like to see a long good standing credit history. The shorter your history, the less they have to score you on. Secondly, your oldest card will generally have the highest limit. If it is paid you will have zero percent balance (see the first statement in this section).

- Be cautious of credit cards that promise to build your credit. They usually have fees and are issued with a balance on them.

- If at all possible, become an authorized user on a trusted family member's credit card. Keep in mind this card should have a low balance and good payment history. It should also be a card they have had for a long period of time. This will lengthen your credit history.

5. Mortgages

- Pay your mortgage on time! If you foresee problems ahead contact your mortgage company. Most will be willing to work with you. They may agree to defer a payment or two. Keep in mind, the amount will be added to your balance and interest charged.

- If you are in an adjustable rate mortgage contact the "Note Modification Department". Most will be willing to try and put you in a fixed mortgage somewhere between your rate and the current average fixed rate. Trust me, the mortgage company makes more money in the long run to collect your interest over 30 years than it does if they foreclose and sell your home.

- If all the bills become too overwhelming pay your mortgage first. If anything has to go unpaid let it be credit cards. Remember, if need be, the mortgage company will come after your house.  

Finally, repairing your credit is a long, hard road. You are graded on your past and present ability to be a responsible borrower. It takes time and effort. Don't take shortcuts and hire a credit company to do the work for you. Most times they do more harm than help. Keep in mind that the more attention you pay to your credit, the more money you will save. Borrowers that have worked hard to repay debts have in turn been rewarded with high credit scores allowing them to borrow money at the lowest cost possible.  

Here is the problem: I've got a client tring to refinance their mobile home but I can't get them into a thiriy-year fixed product with the lenders I have access to. They are currently in an ARM that will adjust soon and have been unable to refi before me because the bank they went to did not recognize their foundation as permenante(it is block and pier and meets state and local guidelines). From what I hear a FHa lender can do this loan all day long. I have exhusted my resources and this is my last chance to help this couple. I would much rather give this one up than let them slip through the cracks. They are in the Charleston SC area and would probably like to work with a lender close to home(they don't have a computer of fax). Please contact me if you can help them out.

I really some help from some one who knows a little about Mobile home mortgages. I've got a borrower that needs to get out of an ARM and into a fixed mortgage for their mobile home. I'm in SC does anyone know of a lender that does 30 fixed products on mobile homes. All I can find is a 30/15 and they are not thrilled with having to refi again in 15 years. Thanks in advance for your help.

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