Posts Tagged ‘Credit bureau’

What Does Your Credit Report Say About You?

October 6, 2016

Check your credit report for inaccuracies at least once a year!

 

When is the last time you checked your credit?

You should check your credit report at least once a year for inaccuracies. You are allowed to request one credit report free per year and also under special circumstance such and unemployed and looking for work.

Did you know most employers now check your credit during the background check? Don’t be caught off guard!

The Free Credit report will not show your scores but will allow you to make sure your credit report is accurate.

Request your free credit report here.

 

 

A Paid Collection is still a Collection.

August 10, 2016

Credit increase credit debt team jeffeson

Did you know….

Just because you pay off a collection it does not erase the derogatory marks on your credit report.

A collection is an account that has been severely past due and the creditor gave up on receiving payment and turned the debt over to a Collection Agency to try to collect the money owed usually adding additional fees to the balance.

Many people believe once a collection is paid that it will be removed from your credit report. Some collection agencies will even go as far as tell you that they will remove the collection from your credit but usually, (unfortunately) this is a ploy to get your payment.

Read more here.

By Donna Jefferson

Credit and Mortgage Loan Specialist

 

 

Interest Rates are going up, how can you improve your credit quickly so you don’t miss out on that dream home?

July 13, 2013

Team Jefferson Home Loans - The Colony - TX - 75056 - 866-403-1426 - Home Loans - Mortgage - Buying a home - VA home loan - FHA home loan - Refinance - Credit - interest rates  (1) 4th

Home loan rates are going back up! Are you going to miss that dream home by waiting too long?

Mortgage rates have been setting records for the past couple of years now have allowed millions of homeowners to refinance or purchase their home.  However interest rates are on the rise again and with higher rates that means the home you can afford, in the near future, may have to buy something smaller price tag. Lower interest rates help you afford more home as interest rates will impact the monthly mortgage payment and your debt to income ratio.

So if you’re on the fence regarding refinancing or purchasing a home keep in mind the sooner you make your move the more home you will be able to get for your money. If credit scores are holding you back here are some quick ways to boost your credit scores.

Pay down your credit card balance. People with higher credit scores tend to maintain their balance to limit ratios to 20% however even 50% can make a huge impact on your scores.

Don’t be late on any accounts that report to the credit bureaus. This will not only drop your scores but can hurt your chances of obtaining a loan if you have too many recent late payments on accounts. I do not suggest making a habit of it but it would be better to negotiate with a bill that doesn’t report to the credit bureau for a late payment arrangement and make sure items that are report to the credit bureau are paid on time each month which may help you avoid a late payment on the credit report. Not a good habit but rather a way to maintain your score while you get back on your feet again with less impact overall.

Team Jefferson Home Loans - The Colony - TX - 75056 - 866-403-1426 - Home Loans - Mortgage - Buying a home - VA home loan - FHA home loan - Refinance - CreditDon’t close your old accounts. It is a common myth that paying off an old credit card and closing it out will help your score but this is not true. It can actually drop your score slightly. It is best to pay down the balances within the 20% of limit and can show you can use the credit wisely it will actually improve your scores. It also looks better on the loan application to show you have been wise with your credit by having more credit extended to you than you are using and the constant revolving credit will continue to boost your scores upward.

If you are trying to buy a home in the very near future do not, “dispute” items on your credit report as Fannie Mae now requires disputed wording to be removed. This will require time on your part to have the three credit bureaus remove this wording and usually you will need to send a letter to the creditor and to all three bureaus which can cause more delays in the loan process. Also once the dispute wording is removed you may see a drop in your scores as well. It is better to leave old debt alone unless it is truly inaccurate.

Limit the inquiries on your credit report. Inquires stay on your credit for as long as two years but has the most impact on the credit score for the first six months following the credit inquiry.

If your credit is already over 620 and you have over 2 established (12 months) trade lines and have been considering refinancing or purchasing a home it may be worth the time to take a serious look at your situation now before rates jump even higher. You do have to prove a two-year job history as well. Rent is going up all around tt will save you money each month by cashing on the still really good rates, not to mention the amount of money you will save over the life of the loan and the wise investment in yourself. What is holding you back?

By Donna Jefferson

 

Ways to correct credit before you buy a home.

April 30, 2013

Tarver

Planning to purchase a home? It takes more than a paycheck to make that happen! I am not a credit expert but rather a mortgage lender that deals with these issues daily and hope to help explain how to make your process through underwriting as stressfree as possible.

Credit 101:

It is my personal opinion that Credit 101 should be taught as a mandatory class in high school considering its importance on everyday life in adulthood. The impact on our finances can be huge. I am in the mortgage business and everyday am reminded of just how little the average person knows about their own credit, how to correct it, keep it clean or to improve it as normally it seems they allow the credit to be on auto pilot and then shocked when I get the pleasure of explaining what is actually reporting their credit report.

One thing I should point out first is that there is no law that states creditors have to report good or bad credit to your report however you can almost assuredly be guaranteed that if you mess up if will be there. I would also like to point out that it is a good idea to check your credit at least once a year to ensure items are reporting correctly. You can ask creditors to report to all three bureaus if you do have an account and notice it is not being reported, some creditor will do this for you but don’t just assume that because you have made that mortgage payment on time for the past three years that the good payment history is being reported to all the creditor bureaus. Also take note that some creditors may only report to one or two of the three bureaus! Research and be familiar with your credit report.

Now, let’s say you haven’t seen your credit report and you apply for that home loan and come to find out there are a few surprises on the report. Here are some tips I have put together to help my clients turn things around after I have to deliver the news that their score isn’t where it should be for a home loan. So if you know you will be planning to purchase a home soon or if you find yourself trying to correct previous mistakes or to help prevent them in the future please read on…

Disputes:

Don’t simply dispute everything you don’t like on your credit. For a while this was a commonly used trick to boast the credit score however lenders are adjusting their guidelines to meet a new government requirement for the automated loan approval system. It is now required by most lenders to remove the wording, “dispute” from the credit report. The reason behind this is that when you have a dispute on a particular trade line it will not count that trade line as the scores are generated. So when there is a “dispute” the score is not an accurate score. The huge down side to this is that it can actually drop your score when the dispute is removed since it is not currently graded when the score is generated. If you happen to use a credit repair company before you pay money for their services ask if they will remove the dispute wording before you complete the program to ensure you are receiving a valid, “non-disputed” credit score.

Opt Out:

Go online and Opt Out if you haven’t already done so. It will stop a lot of junk mail and the offers for pre-approved credit cards but can also increase your score slightly. https://www.optoutprescreen.com/?rf=t  Go to the web page, click the blue button on the bottom, click here to Opt-In or Opt-out, and click the Electronic Opt-out for Five Years, complete the form and hit confirm. If you really want to apply for credit you can seek the company rather than the other way around.

Be on time with your payments:

Remember to not be late or allow anything to go to collections that reports to the credit bureaus. Make is a priority to pay the items that report to the credit bureaus first. It is better to make an arrangement with say, the elect company since they don’t report a late to the credit bureau than a car loan payment that will report your late payment. If your scores are already low a late can do a lot more damage to the overall score.

Collections:

This is a hard one. Once a creditor has reported a collection it is always a collection whether it is paid, settled or a balance still owed. From a lender stand point if a collection is old, (over two years) and you have a valid reason with good credit afterwards we can usually overcome this issue. However, that won’t stop a creditor from adding fees to the balance or reselling the collections making it a new collection on your report. It isn’t always the best thing to contact old collections to pay it off. Honestly it is best to not contact them at all if you can help it. If you do contact them they will start reporting new again with a recent date of last activity.

All states have a Statute of Limitation, the amount of time a creditor can sue you for a debt due to them. Check this link for your state: http://www.consumerfraudreporting.org/debtcollectionsol.php

If you do want to pay an old collection, sometimes you can settle for less than what is owed. If you are calling to pay it off ask them if they will remove the collection from your credit report if you pay it off and always ask for everything in writing from them. If they say they will remove it from your credit if you pay it ask them to fax or email you that statement on their letter head before you pay it off. It has been known that collectors will tell you what you want to hear and then never send you anything to remove or delete the collection. Even if they say they will delete it you should get it in writing first.

If you decide to pay an old collection you may see your score drop for a few months but then it should come back up slightly. It is best to have old collections show a zero balance of course but remember that once a collection always a collection but if you can get them to agree to delete the collection upon payment that is the best route to take…get it in writing!

Judgments or Liens:

In most cases these should be paid in full and settled before you attempt to buy a home. You should attempt to settle judgments and liens as quickly as possible as they may also accrue court cost or additional fees and could become garnishments.

Credit Cards:

Use your credit cards to keep a small rolling balance on the credit cards, this will show your ability to repay debt which will help with the loan but will also improve your scores. Remember to keep the balance at 30% or below of the limit, this will also help keep your scores higher. If the balance is close to the limit it will also actually drop the scores due to your debt ratio.

One way to make sure your balances are always less than 30% of your limits is by having high credit limits. Most credit card companies will automatically review your limit and increase it every six months or so. If this hasn’t happened recently, you can call up your credit card company and ask for an increase. Just keep in mind that this could initiate an inquiry on your credit.

Closing old credit cards can actually harm your credit scores especially if you close several at once. It is best to pay them down or off but only close a one card off at a time. Closing credit cards will also reduce the length of time on a credit account, longer open trade lines is better to help increase the overall credit score and really important for the home loan process.  If you do close an account you may see a drop in your overall credit score but it should increase again in a couple of months.

Another popular strategy is what is commonly known as, “Piggybacking” off of someone else’s good credit. Basically if you know of someone, such as a family member that has a credit card that they pay all the time on time and the balance to limit ratio is good you could ask them to add you as an authorized user so their credit can help your credit. They don’t have to give you a card or anything for this to help give you the benefit of their good credit. Keep in mind that if they miss their payments or maintain a high balance to limit this could actually hurt your score.

Credit Inquiries:

It is best if you do not allow anybody to pull your credit while you are working on the credit. Inquiries can drop your scores quickly so be very cautious on this and protect your scores!

Free Credit Report:

I hear a lot of clients state the scores I give them isn’t the same as the score they received from a credit monitoring company or free credit report company. There are many different types of scores; generic scores are designed to predict how consumers may repay a variety of different loans. Industry scores created to predict how current loans may be repaid such as auto loans or installment loans; custom scores are for lender’s own specific customer and purpose.

When you are planning to purchase a home the scores are based on the fact that you will be making a large purchase the score is based on how likely a potential borrower will default on the loan.

Credit repair

Credit improvement can be complicated but you may benefit from having an expert review your particular situation. It will cost you money to utilize a credit repair company but they can help you to have items deleted off your credit report which can save you thousands of dollars. There are laws to protect consumers and credit repair experts ensure they know the law and time frames to give you the most benefit from using their services. It is important to do your research on the company and that the company you decide to use will work together with your lender for the most impact and improvement to help you not only improve your score but also to put you in a position to obtain a home loan.

In summary,

Today’s world is becoming increasingly dependent on using credit to make purchases and decisions. These days, good credit is used for more than just getting a credit card or a loan. More and more businesses are making the case that you must have good credit before they extend services to you. If you have looked for a job recently you may have had a credit report pulled on you as well.

When it comes to where you live, having good credit is important. Mortgage lenders want to know that you won’t default on your mortgage and that you are a good risk for the loan. If you don’t have good credit you will have a harder time purchasing a home, buying a car, renting an apartment, obtaining insurance, the list goes on and on.

Don’t think that because you’re not on the market for a new home, that your credit won’t be called into question. Be active, educate yourself and keep a guard over your credit, it can easily be destroyed and takes longer to rebuild.

If you would like to receive periodic tips on credit, finances and some fun holiday and decorating ideas visit me on Facebook at Team Jefferson Home Loans or Google Plus at Team Jefferson Home Loans

Good luck!

By Donna Jefferson


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