In these tough times, it isn't unusual for real estate professionals to come across clients, who would like to purchase a home, but are a tad skinny on qualifying for a new mortgage.
It is interesting to note that in fairly short order, a buyer can improve their finances enough to more readily allow for easier qualification of a home loan.
For instance, if you are someone, who has a few credit card or consumer bills coming in each month, there are steps you can do which will help allow for a swifter loan payoff, or more readily get yourself out of debt.
One of the more notable ways is to ask for a lower credit card interest rate, from your existing credit card lenders. A major consumer group conducted a study to find out how easy it was to get a lower credit card interest rate. Fifty-seven percent (57%) of those who simply telephoned their credit card company and asked for a lower interest rate got one instantly. This rate was anywhere from 7 to 10 points lower than their credit card interest rate.
For success in this area, it is important to: (1) Have a good credit rating. There should be no late payment notations on your credit report and you should have a good credit score; (2) You should not have a high debt-to-income ratio, and you should not be carrying a big balance on your credit card; (3) You should also be trying to send in more than the minimum payment each month; (4) You should have an excellent payment record with that particular creditor; (5) The credit card ins not one that is categorized as a "sub-prime", meaning it is not a secured credit card or one marketed exclusively to those with bad credit.
When you call and ask for a lower interest rate, your reasoning should be based on the argument that you deserve it because you're an excellent customer or you're getting better offers from other credit card banks.
In addition to the suggestions mentioned above, another way to get out of debt faster, or to improve your standing, is to look at other consumer loans you have. For instance, perhaps you have a car loan, or are paying off some furniture. If the car or furniture loan is near the payoff date, and it is a hefty amount you are paying each month, perhaps you could go ahead and pay it off early. This removal of a high bill each month, could significantly improve your standing on a credit report.
Myrl, That is great advice. It is encouraging seeing people working on their credit. I just got off the phone with a client who is looking to purchase this spring and she has been getting her credit in order. She had tried earlier but was just a few points lower than what they are taking now.
Myrl, I had no idea you could request a lower interest rate from your credit card. I was in credit debt many years ago and haven't let it happen again....I charge but I almost always pay the entire bill every month. Still, it's good to know for those big ticket items that I charge.
Hi Myrl, this is great information for buyers and anyone trying to improve their credit. I have called a credit card and gotten my rate reduced - it's very easy to do. Anyone should try- the worst they can say is "no".
Thank you for this very informative post. I have to confess I have never thought of actually calling a credit card lender and simply asking for a lower rate. I must try it and see what happens.
Diane - I hope the information is helpful to your client!
John - You're right, they absolutely go hand in hand!
Craig - Trying to built and keep good credit should be a way of life!
Doug and Darrell - Thank you for your comments!
Mike - I don't think Americans are as accustomed to bargaining for the best deal, as other parts of the globe are. We need to become more capable of asking as you say!
Marchel - I have worked with a number of buyers over the years, that needed to wait awhile to buy a home until they could improve their credit. It is amazing how much difference a few changes can make. Like transferring high interest rate debt to a lower interest rate card. And paying off those cards that have high payments but little actually owing.
Dale - Thank you for your kind comments. I hope you have a great day!
Carole - I have been there and done that also. I also payoff my credit cards each month. One year I sat down and calculated how much money had gone out the door for interest alone. It was a real eye-opener.
Mary - I have one credit card that I use most of the time. I charge everything on it including groceries, and gas. It has a high interest rate, but I don't care because I pay it off each month when the bill comes through the door. I keep that card because I love the reward airline miles I get with it. I've made two wonderful trips with those rewards.
Janice - Thank you kind lady!
Steve - Make sure you steel yourself and grab your script first. If you have the script down - (1) You are a good customer (2) You want to keep being their customer, etc. It can make a lot of difference. If not, then it's time to watch for other credit card offers coming through the door. I get them all the time. Not as often as I once did (before our economic meltdown), but they do still come.
Hi Myrl: I read something the other day about a woman who is being charged 29% from CitiMortgage on her credit card. My jaw dropped to the floor. For one thing, I had no idea it was legal for a credit card company to charge that -- for another, who would pay it?
Elizabeth - I've recently heard as high as 31% interest on a credit cards. Isn't it interesting that Usury Law states an interest rate of no more than 9 or 10%, but we are seeing these outrageous rates from banks. I recall years ago, when a Seller would carry back a second deed of trust for a buyer, they couldn't charge more than the "usury" rate for interest. Even though at the time (1981) new mortgages were at 18%. That's a testiment to how strong the banking lobby is in this country. They can get away with interest rates that a private party could only dream of charging.
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Good tips Myrle! I have a buyer who can use some of this advice!
Diane