betterthanu
New Member
hey guys, i currently work with people who have bad credit and get them to repair their credit. Most are families that want to buy houses and here are a few factual tidbits to improve credit and buy a house.
1. pull your credit
Call any local mortgage broker and say that you are interested in refinancing or purchasing a house. They will pull it and let you know what you qualify for. Tell them after they look at it to mail it to you please, that way you can take a look at it. The importance of pulling it with a mortgage broker is that certain credit pulling agencies put more emphasis on certain credit lines for different purchases. Your credit score is not going to be the same when a car dealership pulls it as when i a mortgage banker pull it. Once you receive the credit report, take a look to see if you have any outstanding collections. The companies that you have any accounts with contact numbers and addresses are usually found at the very back of your credit report. If you do and they have been paid but say you haven't paid them, you can dispute them with the 3 major credit reporting agencies. The way to dispute them is to get proof that the collections were paid, and to mail it in with these dispute forms below.....
experian http://www.experian.com/disputes/index.html
equifax https://www.econsumer.equifax.com/consumer/forward.ehtml?forward=online_dispute
transunion http://www.transunion.com/content/page.jsp?id=/personalsolutions/general/data/DisputeCreditReport.xml
These links will provide you with the needed forms to dispute any claims that you have. Just to let you know, you really cannot do anything about lates on your report unless the company was knowingly negligent in reporting your accounts late. very rarely do i see a company that would purposely report you late. and what i mean by that is how many days late you were on a payment. An example is below that is exactly how your credit report would look like:
ACCOUNT ON TIME HISTORY
30 60 90 120
ABC CREDIT CARD 0 1 1 0
15465897528952
LATE DATES
3/2004-90, 5/2004-60
As you can see, the the account name is located on the left with the account number below. Directly below the account number are the dates that you are showing up late and how many days that you were delinquent on the account. As you see, this person was late in march 2004 90 days late. This means that ABC credit card did not receive the jan payment until march, hence 90 days late on his payment. This is shown in the column to the right that he was 90 days late once in the time he has had the account open. He has also been sixty day late 2 months late as you can see and that is not good because he is almost continually late on his payments.
2. How to bring up your credit.
When you dispute your debts and pay them off, it does not really bring your credit score up that much. Lenders do not really look at any credit card or car payments that were late more than a year ago. If you were late Jan 2003, a mortgage lender won't even care really. If you pay off a collection, it brings up your score maybe 2 or 3 points on the credit scoring scale. But, paying off the debts looks good to the person who will underwrite and assess your risk of repaying a home loan. If you have 10 collections outstanding, who the hell is going to lend you $200,000. Not many, but i will at 15% interest.
. Anyways, the best way to bring up your credit is to pay down the balances on your revolving debt(credit card) to 1/3 of the balance. This is the perfect equation for good credit, 1/3 of all available balances. Also, if you get a new credit card, don't jack it up to the limit the first month, they will severly frown upon this.
When trying to purchase a home, you need to have at least 2 open trade lines or credit cards or cars or any other type of credit open that reports on your credit. Phones, gas bill, cable and all that do not count, except for fha and if you need to repair your credit you can forget fha mortgages. They are really strict. Ideally, you will want to have 4 open trade lines that have been open for more than a year, but this is not always the case. 4 trade lines should be fine.
So, if you have low credit and say you have a few collections, open a SECURED credit card for at least $300 and this should bring your credit score up about 20 to 25 points. And by secured i mean you send in cash and your available limit is how much you deposit. This is safe and secure and you can't run up debt with money that isn't there.
3. Financing options
To get 100% financing on a home, you need to have at a 580 middle score on your credit score. What I mean by a middle score is that when you pull all three credit bureaus, we take the middle of all three and use that you price out your loan. IF you have below a 580 you can get financing, but your available amount to finance drops with your score. Ex: If you have a 550 middle score, you may only be able to go to an 80% ltv for you financing. (LTV= take the appraised or current cost of the home and divide it by the amount of financing you can get. Ex: if you have a $100,000 home and you owe $80,000, your ltv is 80%) So, if you can only get 80% financing on a $100,000 home, you need to bring that other 20% or $20,000 to the closing table plus and additonal 3 to 4% for closing costs. A great rule of thumb for what you have to pay in closing costs should be 3 TO 4% max, but it can vary.
The best option to find out if you qualify is to call a mortgage broker and have him go over your credit with you. If they are legit, they will sit down with you and help you repair your credit. All brokerage firms have new loan officers that usually aren't busy and will help you sit down and repair your credit. If you have anymore questions just post them and i will answer when i can. sorry, my arm is killing me and i can't type anymore. take care and good luck.
betterthanu
PS........ DO NOT I REPEAT, DO NOT EVER, EVER BE LATE ON FEDERAL OR GOVERNMENT DEBT. SCHOOL LOANS, FEDERAL CREDIT UNION, TAXES, ANYTHING THAT HAS TO DO WITH THE GOVERNMENT. WORST THING THAT YOU CAN DO TO YOURSELF. THIS WILL BRING YOUR CREDIT DOWN THE MOST.
1. pull your credit
Call any local mortgage broker and say that you are interested in refinancing or purchasing a house. They will pull it and let you know what you qualify for. Tell them after they look at it to mail it to you please, that way you can take a look at it. The importance of pulling it with a mortgage broker is that certain credit pulling agencies put more emphasis on certain credit lines for different purchases. Your credit score is not going to be the same when a car dealership pulls it as when i a mortgage banker pull it. Once you receive the credit report, take a look to see if you have any outstanding collections. The companies that you have any accounts with contact numbers and addresses are usually found at the very back of your credit report. If you do and they have been paid but say you haven't paid them, you can dispute them with the 3 major credit reporting agencies. The way to dispute them is to get proof that the collections were paid, and to mail it in with these dispute forms below.....
experian http://www.experian.com/disputes/index.html
equifax https://www.econsumer.equifax.com/consumer/forward.ehtml?forward=online_dispute
transunion http://www.transunion.com/content/page.jsp?id=/personalsolutions/general/data/DisputeCreditReport.xml
These links will provide you with the needed forms to dispute any claims that you have. Just to let you know, you really cannot do anything about lates on your report unless the company was knowingly negligent in reporting your accounts late. very rarely do i see a company that would purposely report you late. and what i mean by that is how many days late you were on a payment. An example is below that is exactly how your credit report would look like:
ACCOUNT ON TIME HISTORY
30 60 90 120
ABC CREDIT CARD 0 1 1 0
15465897528952
LATE DATES
3/2004-90, 5/2004-60
As you can see, the the account name is located on the left with the account number below. Directly below the account number are the dates that you are showing up late and how many days that you were delinquent on the account. As you see, this person was late in march 2004 90 days late. This means that ABC credit card did not receive the jan payment until march, hence 90 days late on his payment. This is shown in the column to the right that he was 90 days late once in the time he has had the account open. He has also been sixty day late 2 months late as you can see and that is not good because he is almost continually late on his payments.
2. How to bring up your credit.
When you dispute your debts and pay them off, it does not really bring your credit score up that much. Lenders do not really look at any credit card or car payments that were late more than a year ago. If you were late Jan 2003, a mortgage lender won't even care really. If you pay off a collection, it brings up your score maybe 2 or 3 points on the credit scoring scale. But, paying off the debts looks good to the person who will underwrite and assess your risk of repaying a home loan. If you have 10 collections outstanding, who the hell is going to lend you $200,000. Not many, but i will at 15% interest.
. Anyways, the best way to bring up your credit is to pay down the balances on your revolving debt(credit card) to 1/3 of the balance. This is the perfect equation for good credit, 1/3 of all available balances. Also, if you get a new credit card, don't jack it up to the limit the first month, they will severly frown upon this. When trying to purchase a home, you need to have at least 2 open trade lines or credit cards or cars or any other type of credit open that reports on your credit. Phones, gas bill, cable and all that do not count, except for fha and if you need to repair your credit you can forget fha mortgages. They are really strict. Ideally, you will want to have 4 open trade lines that have been open for more than a year, but this is not always the case. 4 trade lines should be fine.
So, if you have low credit and say you have a few collections, open a SECURED credit card for at least $300 and this should bring your credit score up about 20 to 25 points. And by secured i mean you send in cash and your available limit is how much you deposit. This is safe and secure and you can't run up debt with money that isn't there.
3. Financing options
To get 100% financing on a home, you need to have at a 580 middle score on your credit score. What I mean by a middle score is that when you pull all three credit bureaus, we take the middle of all three and use that you price out your loan. IF you have below a 580 you can get financing, but your available amount to finance drops with your score. Ex: If you have a 550 middle score, you may only be able to go to an 80% ltv for you financing. (LTV= take the appraised or current cost of the home and divide it by the amount of financing you can get. Ex: if you have a $100,000 home and you owe $80,000, your ltv is 80%) So, if you can only get 80% financing on a $100,000 home, you need to bring that other 20% or $20,000 to the closing table plus and additonal 3 to 4% for closing costs. A great rule of thumb for what you have to pay in closing costs should be 3 TO 4% max, but it can vary.
The best option to find out if you qualify is to call a mortgage broker and have him go over your credit with you. If they are legit, they will sit down with you and help you repair your credit. All brokerage firms have new loan officers that usually aren't busy and will help you sit down and repair your credit. If you have anymore questions just post them and i will answer when i can. sorry, my arm is killing me and i can't type anymore. take care and good luck.
betterthanu
PS........ DO NOT I REPEAT, DO NOT EVER, EVER BE LATE ON FEDERAL OR GOVERNMENT DEBT. SCHOOL LOANS, FEDERAL CREDIT UNION, TAXES, ANYTHING THAT HAS TO DO WITH THE GOVERNMENT. WORST THING THAT YOU CAN DO TO YOURSELF. THIS WILL BRING YOUR CREDIT DOWN THE MOST.
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