| It's sometimes surreal to think that in the | | | | to a record of bad credit and lower the credit |
| institutional Lending industry that most people are | | | | score. |
| reduced to the 3 digit number known as the FICO | | | | A credit score of 720 or above is likely to yield |
| score. As cold as it might seem at times it is | | | | the best interest rates. Typically, the minimum |
| "objectively" the most fair and quickest way to | | | | score for mortgage lenders to approve a 30-year |
| determine the acceptable risk level of a borrower. | | | | fixed-rate mortgage with a reasonable interest |
| I'm an "insider" that looks at credit reports all day. | | | | rate is 620. Potential homebuyers with bad credit |
| I'm here to tell you what is wise credit use, | | | | will probably have scores lower than this. These |
| what's B.S., how accurate a FICO score is and the | | | | homebuyers can try to repair their credit and |
| best ways to optimize your credit so you may | | | | increase their credit score. |
| get financed for the Home of your dreams | | | | To repair credit, experts recommend that |
| FICO score and credit reports play a big part in | | | | homebuyers submit all payments on time and pay |
| the home loan application process, but this does | | | | off all overdue debt. Of course this is common |
| not mean that potential homebuyers with a | | | | sense. Some of the not so common sense |
| less-than-stellar credit history cannot get a | | | | approaches are the following. |
| mortgage loan. Many mortgage lenders work with | | | | 1. Keep all revolving debt (credit cards) below |
| bad credit mortgage applicants. These bad credit | | | | 50% (or below 33% is even better) of the Total |
| applicants could oftentimes receive higher | | | | credit limit; spread it out across different accounts |
| mortgage interest rates. | | | | if you must. |
| Mortgage lenders use credit reports to determine | | | | 2. Never Close out accounts after they are paid |
| the amount of the mortgage loan and mortgage | | | | off just don't use them (this has to do with |
| rate, as well as other mortgage conditions and | | | | utilization ratios of available credit) If you must |
| terms that they will offer the homebuyer. Usually, | | | | close accounts always close the newest accounts |
| the better the credit, the better the terms | | | | first and leave the older well established accounts |
| mortgage lenders would be able to offer. | | | | open |
| Mortgage refinancing options are also dependent | | | | 3. Stay away from lending sources that are |
| on the homebuyer's credit reports. There are | | | | considered "Finance" companies. It seems that |
| three major credit reporting agencies: Experian, | | | | these types of loan sources can actually hurt |
| Equifax, and Trans Union. Homebuyers may obtain | | | | credit scores in some instances. |
| one free credit report from each of these | | | | 4. Dispute inaccurate info on all 3 of your credit |
| agencies every 12 months. Mortgage lenders | | | | reports as well as with the actual |
| typically look at a merged report from all three | | | | creditors...Preferably send a dispute to the creditor |
| agencies. | | | | first, wait a week and send a dispute for the |
| The credit reports list the homebuyer's history of | | | | same account to the Credit reporting agency |
| accounts including credit card, student loans, and | | | | reporting the inaccurate info. |
| real estate loans. They also list auto financing | | | | 5. Do not constantly take actions that have your |
| plans, child support, charge offs, and other financial | | | | credit pulled like applying for too much credit. Too |
| accounts. The reports supply information on each | | | | many credit inquires severely impact your FICO |
| account, such as when the account was opened, | | | | score |
| what the current balance is, what the highest | | | | If you are going to play the loan and credit game |
| balance was, and when each past-due payment | | | | and plug yourself into the system of "institutional |
| was made. If the account was closed, the reports | | | | lending" you have to play by the rules of the |
| will give the date it was closed and supply a | | | | game that are established by the lending and |
| reason if necessary. | | | | credit institutions. As ugly as that may seem |
| The reports also contain public records such as | | | | sometimes this is the world we live in. The good |
| bankruptcy and foreclosure. Bankruptcy | | | | news is there are ways for anyone with any |
| information stays on the records for 10 years. | | | | credit rating or FICO score to get financed for |
| Account information stays on the records for | | | | what ever they want. Albeit sometimes it |
| seven years after the account is paid off. The | | | | requires some credit repair and fico score |
| information in these reports is not completely | | | | recovery. |
| current or it is one to three months behind the | | | | The process to recovery is a long one, but it is |
| date the reports are created. | | | | worth going through in order for homebuyers to |
| Based on this information, the potential | | | | obtain a good home mortgage loan. For |
| homebuyer is assigned a credit score ranging | | | | homeowners who cannot wait out the long |
| from 300 to 850. This credit score is often | | | | process of credit repair, getting a mortgage loan |
| known as a FICO score, named after the Fair | | | | from a lender that deals with bad credit |
| Isaac Company that came up with this method. A | | | | mortgages could be a good option....I just happen |
| lot of factors can affect the score. Late | | | | to know Many sources that cater to just that |
| payments on the accounts and unpaid debts lead | | | | need... |