Your Credit Can be a Mystery

“Your Credit Can be a Mystery”

For the past year I have been working with Amy to get her credit to a point that she can qualify for a mortgage.

A little history, divorced, mother of two, working full time, plus has a small home business, paying $1,300 rent and wants to own her own home.

As part of the divorce agreement, she ended up with responsibility of paying all the credit cards. They were not huge balances, but a dozen accounts. She couldn’t make all the payments, so she stopped paying most of them.

That is good news and bad news. The good news is the ones that she was paying reported positively to the credit bureaus, the bad news the others we hurting the credit scores a lot faster.

The fixing process can be overwhelming. I coached her to start working on the smallest problems first. $4,800 later, all the derogatory credit has been resolved. We started with a mid score of 528 to being 120 points higher.

She has made 2 offers on homes and is getting close to becoming a homeowner. Her monthly payment will certainly be less than her mortgage payment.

Anyone can get to credit fitness, once they are committed, just like Amy.

Do Your Buyers Need Help with Their Credit Fitness?

By: Monica O’Neill

Many homebuyers now and into the foreseeable future will face tight lending standards and the need to improve their credit score to get pre-qualified or pre-approved for mortgages. Be aware of the following steps your prospects can take for some speedy credit repair to gain lender approval and the best possible rates, especially if they are months away from a purchase:

Credit Card Wisdom
• Paying revolving credit cards down is generally more beneficial than paying down student, mortgage or auto loans.
• Always leave a 30 percent or higher gap between what you owe on the card and the card’s limit. Lenders look for this minimum gap.
• Use cards with care even if you pay off balances each month. Depending upon statement dates, the lender may see big balances.
• Pay down the cards closest to their limits first for speedier credit repair. The lending bank will then see the “gap” it wants to see.
• Do not ask a creditor to lower credit limits. Generally, carrying smaller balances on several cards is better than one large balance on one card.
• Check your credit card limits to make sure the report is correct. Limits may not be reported on all cards.
• Never make a late payment on credit cards or any loan.

Protesting Items
• Protest any unjust negatives such as late payments, collections that are not yours and any items not reported as “paid as agreed” if you paid on time and in full.
• Protest items listed as unpaid that were included in a bankruptcy, and items older than seven years (10 for bankruptcy).
• Focus first on the larger, newer negatives listed on the report.

Don’t worry about smaller items like incorrect address information or an old employer listed as current unless there’s the possibility of identity theft or the file is mixed with someone else’s.

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