Credit Law Center Credit Score

What’s Stopping You From Borrowing?

I Want To Buy, Now!

Are you preparing to purchase a home in the next few months? It seems that when we are not looking, a home just pops up and finds us, at a time when we were not even contemplating making a move. Then, boom!  The rush is on to beat the clock and make an offer before the next person does. With how quick homes are flying off the market, the best thing to do is be as prepared as possible right now, in the event you do find what you are looking for.

Many borrowers hoping to apply for a home loan are unsure of what a lender might need because it is either their first time, or the process was so long ago. Let’s go more in depth here, about what you will need to get to the point that you are ready to purchase!

Here are 4 things you’ll want to start thinking about before you meet with your lender:

  1. Locating your W2, pay stubs and documents to provide proof of income
  2. Decide if someone will be on the loan with you
  3. How much money you may have/can save for a down payment
  4. Your credit scores
This list will start to prepare you for what your lender will want to discuss with you. More often than not, what is going to keep you from moving through the process as quick as you’d like, is if your credit scores are not where they need to be.
Facts on Fico

FICO is grading you on a few key factors:

  • Payment history
  • New credit
  • Types of credit used
  • Length of credit history
  • Amounts owed

 

If you are looking at your credit report and seeing several derogatory accounts, late payments or other items you will want to look at cleaning up your credit before you go in to a lender. In an effort to lessen the pain of a solid “No” next time you meet a lender, and miss out on your dream home, please consider the following points. If you feel you are a high risk borrower, there are a few things you can you do to ensure that you can lower your risk to lenders. The more prepared you are and the more education you have, the more equipped you will be to get approved and improve your buying power!

4 Challenges of a High Risk Borrower

1. Do you have a low Fico?

You can be sure that your lender will be taking a look at your credit report when you are thinking about purchasing a home. This score is a large portion of what they are using to determine your trustworthiness and the likelihood of you defaulting on a loan, based off previous loans, bank accounts, credit card payments, etc. As important as the scores are in this process, do not let this keep you from going in to see a lender.

If your FICO scores are low there are several things you can do to increase your scores on your own. Read more here, or speak to a credit advisor at Credit Law Center so they can look through your report and ensure you are mortgage ready before you find the home of your dreams.

2. What does your employment status look like? 

Your employment status and employment change are two very different things. Should you be changing jobs often, this may be cause for concern. If you are working a full-time job with regular, consistent pay, creditors prefer this. If you do not work on a set schedule with set pay however, or maybe are self-employed (with less than 2 years of verifiable income), a lender may be very hesitant to lend you any money.

 

 

free credit repair consultation

 

3. Are you lacking excess funds?

Although there are several programs in place for borrowers with little to no money down, it is a good idea to save and have some skin in the game for a down payment. Many lenders would prefer to work with someone that has shown financial responsibility and saved and set aside money. A lender may be hesitant if you  do not, and potentially feel like you still may be a risk.

4. Are you avoiding other responsibilities you have?

Late payments impact your credit score the greatest. If a lender sees you have been falling behind on responsibilities you already have, this can be a large red flag during this process. Again, they are considering the likelihood of you to fall behind on the loan, and if you are late on several bills, why would they feel your mortgage would be any different?

If the above apply to you, and you are potentially a high risk borrower, do not let that stop you from pursing a home. As discouraging as things might seem, there is hope for you after some time of getting back on track.

If your credit is not where it should be and your lender has expressed concern, you may look into a few different options within credit repair. If you are in a rush and are pressed for time, Credit Law Center can help you through a quick and affordable process. Each round with Credit Law Center lasts 30-45 days. If you have items on the credit report that have to be removed (collections, tax liens, bankruptcy, etc) allow a credit advisor to walk you through a consultation.

The credit advisors at Credit Law Center will let you know what you can work on, on your end as well as what you may be doing that is keeping you from higher credit scores. With a little help and a guide to walk with you, that new home may be closer than you expected.fund

Credit Score

Financing A Vehicle II Where To Start

Time For A New Car?

Several years ago when I was broken down on the side of the interstate in my 92 Jeep Cherokee I thought to myself “My next car is going to be brand new so I don’t have to deal with this gain!”  I knew that I would need to finance as I was just a twenty something with a low end painting job, but I was hopeful that I would be approved. I was quite ambitious for a boy with little to no credit reported or open trade lines.

Fast forward to later that evening; I sat in the Nissan dealership for hours, hoping one lender would overlook my credit score and provide me with anything! Spoiler: No lender would even consider me and my abysmal credit score. At that moment I knew that I would have to go about this a different way if I ever wanted to even be considered for financing and began my research over how exactly credit worked.

 

Understanding Your Credit

First off, I had to get a hold of my credit report and see just exactly what was going on. My credit adviser directed me to Free Credit Hub where I was able to sign up for credit monitoring and finally see what was dragging my credit! I was greeted with a cacophony of different numbers, phrases and names that filled the pages and made my stomach drop. My adviser walked me through each  line on the report and explained that there were multiple categories that made up the report. Those categories were:

1. Payment History-  35% of your credit score is based on your past bills and how they were paid.

2. Amounts Owed- 30% of your credit score is based on the available credit card limit you’re using and the amount you owe across your accounts.

3. Length of credit history – 15% of your credit score is determined by the credit history you have built. This is based on the average age of your accounts  along with a few other factors. The longer the history, the better the results!

4. Credit mix – 10% of your score is from the mix of revolving credit (credit cards) and installment credit (car loans, mortgages, etc.) you have.

5. New credit – 10% of your credit score comes from new credit accounts that you have established.

 

Time To Build!

Alright, now that I know what exactly makes up my credit, it is time to start building it up! I took 3 easy steps to start building positive credit and the foundation for a strong credit score.

  1. Lowering My Card Utilization– When I got my first credit card I was told to never use more than 50% of the allowed credit and I would be fine. If we look at our credit utilization like a grade card, a 50% utilization rate is a solid F. 30% is about a C rating and the lower you go the better your rating. Keeping your utilization under 10% is an A rating and is sure to build your credit the fastest.
  2. Becoming An Authorized User– Becoming an authorized user is by far one of the easiest ways to build credit and is kind of like passive income. If you are listed as an authorized user on a trusted family members card, their history is listed on your report as well and you don’t even have to use the card! Be sure you work with someone you trust because the negative history will be placed on your report as well.
  3. Pay Your Bills On Time-  Paying off those balances on time is extremely important when building credit as it provides positive credit history and establishes a exceptional trade line. Late payments are one of the largest discrepancies on most Americans credit report!

 

Your Car Loan Will Help Build Credit.

After about 6 months of building up my credit, I was able to acquire financing toward a new vehicle. You don’t need to have perfect credit to acquire a car loan, but it will affect your financing options and future payments. The wonderful thing about this loan is that it establishes another line of installment credit to your account. As long as you are making your payments on time, this installment credit will soon become a wonderful trade line that builds a long credit history. In the end it is all bout finding the right lender for you and managing a positive ascending credit score. If done correctly, you will be on the road that that fabled 800 credit score!

 

 

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

Credit Law Center Credit Score

What’s Stopping You From Borrowing?

I Want To Buy, Now!

Are you preparing to purchase a home in the next few months? It seems that when we are not looking, a home just pops up and finds us, at a time when we were not even contemplating making a move. Then, boom!  The rush is on to beat the clock and make an offer before the next person does. With how quick homes are flying off the market, the best thing to do is be as prepared as possible right now, in the event you do find what you are looking for.

Many borrowers hoping to apply for a home loan are unsure of what a lender might need because it is either their first time, or the process was so long ago. Let’s go more in depth here, about what you will need to get to the point that you are ready to purchase!

Here are 4 things you’ll want to start thinking about before you meet with your lender:

  1. Locating your W2, pay stubs and documents to provide proof of income
  2. Decide if someone will be on the loan with you
  3. How much money you may have/can save for a down payment
  4. Your credit scores
This list will start to prepare you for what your lender will want to discuss with you. More often than not, what is going to keep you from moving through the process as quick as you’d like, is if your credit scores are not where they need to be.
Facts on Fico

FICO is grading you on a few key factors:

  • Payment history
  • New credit
  • Types of credit used
  • Length of credit history
  • Amounts owed

 

If you are looking at your credit report and seeing several derogatory accounts, late payments or other items you will want to look at cleaning up your credit before you go in to a lender. In an effort to lessen the pain of a solid “No” next time you meet a lender, and miss out on your dream home, please consider the following points. If you feel you are a high risk borrower, there are a few things you can you do to ensure that you can lower your risk to lenders. The more prepared you are and the more education you have, the more equipped you will be to get approved and improve your buying power!

4 Challenges of a High Risk Borrower

1. Do you have a low Fico?

You can be sure that your lender will be taking a look at your credit report when you are thinking about purchasing a home. This score is a large portion of what they are using to determine your trustworthiness and the likelihood of you defaulting on a loan, based off previous loans, bank accounts, credit card payments, etc. As important as the scores are in this process, do not let this keep you from going in to see a lender.

If your FICO scores are low there are several things you can do to increase your scores on your own. Read more here, or speak to a credit advisor at Credit Law Center so they can look through your report and ensure you are mortgage ready before you find the home of your dreams.

2. What does your employment status look like? 

Your employment status and employment change are two very different things. Should you be changing jobs often, this may be cause for concern. If you are working a full-time job with regular, consistent pay, creditors prefer this. If you do not work on a set schedule with set pay however, or maybe are self-employed (with less than 2 years of verifiable income), a lender may be very hesitant to lend you any money.

 

 

free credit repair consultation

 

3. Are you lacking excess funds?

Although there are several programs in place for borrowers with little to no money down, it is a good idea to save and have some skin in the game for a down payment. Many lenders would prefer to work with someone that has shown financial responsibility and saved and set aside money. A lender may be hesitant if you  do not, and potentially feel like you still may be a risk.

4. Are you avoiding other responsibilities you have?

Late payments impact your credit score the greatest. If a lender sees you have been falling behind on responsibilities you already have, this can be a large red flag during this process. Again, they are considering the likelihood of you to fall behind on the loan, and if you are late on several bills, why would they feel your mortgage would be any different?

If the above apply to you, and you are potentially a high risk borrower, do not let that stop you from pursing a home. As discouraging as things might seem, there is hope for you after some time of getting back on track.

If your credit is not where it should be and your lender has expressed concern, you may look into a few different options within credit repair. If you are in a rush and are pressed for time, Credit Law Center can help you through a quick and affordable process. Each round with Credit Law Center lasts 30-45 days. If you have items on the credit report that have to be removed (collections, tax liens, bankruptcy, etc) allow a credit advisor to walk you through a consultation.

The credit advisors at Credit Law Center will let you know what you can work on, on your end as well as what you may be doing that is keeping you from higher credit scores. With a little help and a guide to walk with you, that new home may be closer than you expected.fund

MORTGAGE LENDING REFORM

4 Tips For Buying A House

Building Buying Power

 Have you been picturing the day when you can paint your own walls and mow your own grass? The dream of homeownership comes with great financial responsibility. Many first-time home buyers have questions about their down payment, and how they can start saving to make that first major purchase. We’ll discuss several organizations that are willing to help you with the financial burden and get you into your own home soon.

The process of applying for a loan can be overwhelming and stressful. Without an excess amount of funds, you may find yourself digging in couch cushions and trying to work extra hours to come up with the funds and savings to start the journey toward homeownership.

There are a few major factors that come into play when getting pre-qualified for a home loan.

  • Credit Scores
  • Income
  • Debt
  • Down payment

Paying Down Debts? │ Not Enough Left For A Down Payment?

If you have been trying to pay down debts or have been in the credit repair process, again, excess funds may be low. After your income has been reviewed by a trusted lender, more than likely you have discussed how much money you will need for a down payment. Did the amount of money sound manageable?

There are a few loan programs that require no down payment like USDA, which you have to meet strict income guidelines for. Another is the VA loan which is only available to eligible Veterans. Let’s say you won’t qualify for either of these, what happens next?

All hope is not lost! There may be help right around the corner, you just have to know where to look. Below is a list of some other options out there to possibly help jump-start the home buying process for you.  

free credit repair consultation

Down Payment Assistance Programs

For down payment assistance, there may be a household income limit or a limit on the purchase price. Look in your area where you are hoping to purchase. There are some cities will also contribute and help with down payment assistance. You can search on your City website where they may talk about things like how to get grant money or down payment assistance for first time home buyers!

Talk to your lender further about what programs they may know of in the area in order to help you with funds. If you are a first time home buyer, there may be a program for you! Hoping to buy a home in a historic district? There are grants for homes in certain areas of towns where they would like to see the homes restored and rehabbed too.

 

Habitat For Humanity

Habitat for Humanity occasionally partners with homes with income restrictions that are in need of an overhaul and some DIY. For this program, reach out to your local organization to learn about the qualifications and application process or visit their website https://www.habitat.org/

 

Community Land Trusts

Community Land Trusts are also nonprofits that are willing to make the buying process more affordable by selling just the building. There would be a lease on the land that you occupied. In an effort to strengthen and serve low-income families, these Community Land Trusts serve the community and work to create homes that are permanently affordable and last for generations.

 

Ready For Home Ownership?

Throughout the home buying process, there will be so many new things to learn as you become a homeowner.

A few things to start doing in order to take the next step in the process are:

Shop Around For The Best Mortgage

If you are ready to take on home ownership, start looking around at lenders in your area. Consider the pros and cons of a bank, credit union, online lender or mortgage broker.

Be extremely careful as you shop around that you don’t allow each institution to start pulling credit right away!

Apply

Your credit will be pulled at this point by the lender you are using. When you have decided on the best option you will need several documents like your paystub, recent bank statements and tax return documents. There will be many different types of documents that dive deep into your finances. Remember to hold off on applying for new credit, buying a new car or making large purchases before you close!

This can really hurt your credit scores and may cause an issue for your home purchase. If your lender cannot get you pre-approved with your credit scores they may refer you to a credit repair company so that you can work on your scores. Some credit repair companies work with you as quick as they can to get your scores up so you can get back to the lender as soon as possible!

Pre Approval

Once you complete the application, your lender will decide based on the documents you provided. At this point, the lender will let you know how much they are willing to loan. This document is typically good for 60-90 days.

Start Shopping!

Now is the time to grab your agent and start checking out all the open houses and find your dream home!

Make An Offer

Once you find the house you are looking for, your agent will write a contract up and have you sign the purchase agreement.

As you move forward with your home purchase there will be loads of paperwork and numbers thrown at you. Your lender will be your guide throughout the process and will keep you updated on documents they need in order to get your file closed on time. Talk with friends, your agent, and family about lenders they have used. The home buying process is one that can be stressful, but with the right guide, it can be exciting too!

credit repair consultation

 

Too Many Inquiries

Getting Ready For A New Car!

Time For A New Car?

Several years ago when I was broken down on the side of the interstate in my 92 Jeep Cherokee I thought to myself “My next car is going to be brand new so I don’t have to deal with this gain!”  I knew that I would need to finance as I was just a twenty something with a low end painting job, but I was hopeful that I would be approved. I was quite ambitious for a boy with little to no credit reported or open trade lines.

Fast forward to later that evening; I sat in the Nissan dealership for hours, hoping one lender would overlook my credit score and provide me with anything! Spoiler: No lender would even consider me and my abysmal credit score. At that moment I knew that I would have to go about this a different way if I ever wanted to even be considered for financing and began my research over how exactly credit worked.

 

Understanding Your Credit

First off, I had to get a hold of my credit report and see just exactly what was going on. My credit adviser directed me to Free Credit Hub where I was able to sign up for credit monitoring and finally see what was dragging my credit! I was greeted with a cacophony of different numbers, phrases and names that filled the pages and made my stomach drop. My adviser walked me through each  line on the report and explained that there were multiple categories that made up the report. Those categories were:

1. Payment History-  35% of your credit score is based on your past bills and how they were paid.

2. Amounts Owed- 30% of your credit score is based on the available credit card limit you’re using and the amount you owe across your accounts.

3. Length of credit history – 15% of your credit score is determined by the credit history you have built. This is based on the average age of your accounts  along with a few other factors. The longer the history, the better the results!

4. Credit mix – 10% of your score is from the mix of revolving credit (credit cards) and installment credit (car loans, mortgages, etc.) you have.

5. New credit – 10% of your credit score comes from new credit accounts that you have established.

 

Time To Build!

Alright, now that I know what exactly makes up my credit, it is time to start building it up! I took 3 easy steps to start building positive credit and the foundation for a strong credit score.

  1. Lowering My Card Utilization– When I got my first credit card I was told to never use more than 50% of the allowed credit and I would be fine. If we look at our credit utilization like a grade card, a 50% utilization rate is a solid F. 30% is about a C rating and the lower you go the better your rating. Keeping your utilization under 10% is an A rating and is sure to build your credit the fastest.
  2. Becoming An Authorized User– Becoming an authorized user is by far one of the easiest ways to build credit and is kind of like passive income. If you are listed as an authorized user on a trusted family members card, their history is listed on your report as well and you don’t even have to use the card! Be sure you work with someone you trust because the negative history will be placed on your report as well.
  3. Pay Your Bills On Time-  Paying off those balances on time is extremely important when building credit as it provides positive credit history and establishes a exceptional trade line. Late payments are one of the largest discrepancies on most Americans credit report!

 

Your Car Loan Will Help Build Credit.

After about 6 months of building up my credit, I was able to acquire financing toward a new vehicle. You don’t need to have perfect credit to acquire a car loan, but it will affect your financing options and future payments. The wonderful thing about this loan is that it establishes another line of installment credit to your account. As long as you are making your payments on time, this installment credit will soon become a wonderful trade line that builds a long credit history. In the end it is all bout finding the right lender for you and managing a positive ascending credit score. If done correctly, you will be on the road that that fabled 800 credit score!

 

 

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

Students Loans and Credit Scores

Student loans seem to be on almost everyone’s credit reports. They can positively impact your credit scores if you are consistent with your payments and aware of what is happening with your loan. As with any bill or loan you take out, it is extremely important to your credit score as well because it can also have a negative impact too. We will discuss some of the positive ways that your loan can impact your credit, as well as a few ways it can do severe damage if you are not careful.

The Positives

1. Payment History

A student loan, when paid correctly, can be a great trade-line for your credit report. If you make the minimum payments, this shows great repayment on your part that you can reliable and make on time payments. This part of the credit report makes 35% of the FICO grading scale. The difference with a student loan as opposed to your other monthly bills such as your car insurance is that they do not report monthly (only when you miss the payment or fall into collection) whereas your loan will report positively when you have positive payments. This is great for your credit!

For some consumers, building credit is hard to do if you do not have an auto loan or any credit cards, but your student loan can help start to establish that payment history.

2. Building A Credit Mix

For a while, there was a myth out that having “diverse” accounts helped your scores and provided for a healthy mix of credit. Only about 20% of your FICO score is made up of new credit and types of credit used. Typically, having two revolving accounts and two loans (home, auto,or personal) are sufficient enough in trying to build on your scores. Your student loan will also help you start to fill out a portion of that percentage of your credit mix while you continue to make positive payments.

 

free credit repair consultation

The Negatives

 

1. Late Payments on Loans

A good way to completely tank your credit scores quick, fast and in a hurry is to get a late payment. As much as on time payments can help your credit score, they can also harm them, sometimes up to 100 points.

These bad or derogatory remarks can stay on your credit report for up to seven years. If continue to miss your payments and they continue to roll over, your scores will just keep dropping and dropping. The other piece to this puzzle that is not good, is how long it can take for you to rebuild once you have fallen behind. Be aware of what is happening with your bills and other finances and communicate with your institution if you start to fall behind.

2. Defaulting 

If your accounts are sent to collections, this can also really impact your credit scores. Often times, creditors will not lend you any money unless you “correct” it and make it right with the lender of the money. If you go and apply for a home loan and they see collection status, it can be extremely hard for them to justify lending to you with a lot of derogatory marks on the report.

You may hope to open credit cards and start to establish credit but the creditor denies you due to the defaults on your credit report. All in all, if you are seeing collections/charge offs or have been denied financing, you may want to reach out to a credit repair company today.

What Resources Are There?

Having student loans and pursuing a degree is important in this day and age. We see so many student loans every day on credit reports that are doing great things for people and their credit report. Make sure you stay up to date on the payments and work as well on establishing credit.

For more information on student loans and second chance checking, please visit this site. You will find a lot of programs to help you out in regards to student loans if you have not been able to find any resources yet that work.

Recent Updates to VA Loans Everyone Should Know About

Acclimating to New Changes

Last year was an interesting year; with the COVID-19 pandemic and the presidential election, everything seemed slightly different. However, not everything that happened last year was negative, with the previous year bringing some significant updates to VA home loans, which have since significantly increased their usage. According to recent data, the use of VA loans increased by 11.4% from 2019 to 2020, bringing a total of more than 1.2 million loans guaranteed in one year due to these changes.

Signed into law on June 25, 2019, by the U.S. President, the Bluewater Navy Act has brought some significant changes to the VA loan program. The White House passed the act intending to compensate Vietnam War Veterans who got exposed to harmful chemicals during their deployment. The law also changed two significant parts of the VA loan program by changing the VA loan funding fee and the VA’s loan limits.

Changes to the Funding Fee

VA Funding Fee Changes for 2020 | HOUSE Team

The VA funding fee, a one-time payment that VA loan applicants have to pay on their loan, was temporarily changed. The change made it so that Active Duty Service Members pay an increased funding fee of 0.30%, which previously was at 0.15%. Members of the National Guard and members of the reserves, on the other hand, are now paying a lower amount on their funding fees. However, these changes are temporary and are said to last for at least the next two years.

Active Duty Service Members who have a purple heart can have their funding fee removed as long as they close their home while in an active-duty status. Also, veterans with disabilities who were already exempt from paying the funding fee did not see any changes to their funding fee payment requirements.

Removal of the VA Home Loan Limit Previously, borrowers who applied for a VA loan had to deal with VA county loan limits, which varied per county. That is no longer the case as the VA completely removed these loan limit requirements for first-time VA home loan borrowers. Therefore, VA home loan recipients now have the opportunity to live in more affluent communities, previously unaffordable due to the VA loan limits.

Applicants who already have a VA loan and want to take out a second one are still subject to their county VA loan limit, which on average, as of 2021, has a limit of $548,250, which can vary per county.

It is important to note that although the loan limit removal allows lenders to lend out more, it does not mean that lenders won’t limit how much you can borrow. Since loans are given out by lenders and not the VA, there can still be limits set for how much you can borrow. Currently, VA Home Loan Centers has a loan limit of $5,000,000 for first-time VA loan borrowers.

Native American Veterans who apply for a VA home loan and plan to purchase a home on Federal Trust Land no longer have to deal with loan limit requirements.

What is a VA Home Loan?

MOAA - Inspector General Finds VA Overcharged Disabled Vets on Home Loans

Often touted as one of the best government-guaranteed home loans available, VA home loans offer several significant benefits. These include no down payment requirements, no mortgage premiums, low-interest rates, low monthly payments, and fixed mortgages, which last anywhere between 15 to 30 years.

Also, the U.S. Government guarantees these loans, giving lenders protection if borrowers cannot afford to make their monthly mortgage payments and end up defaulting. Hence, lenders are more lenient with their application requirements and are willing to work with applicants with a low credit score.

Conclusion

The signing of the Bluewater Navy Act has brought changes to the VA home loan program. These changes increased the amount of housing opportunities for our brave men and women in uniform. The law improves an already excellent government loan program by empowering borrowers with the removal of VA loan limits.

Phil Georgiades is the Certified Leasing Specialist for VA Home Loan Centers, a government-sponsored brokerage specializing in VA Home Loans. He has also been a real estate professional for 22 years. To apply for a VA loan, call us at (877) 432-5626.

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give Credit Law Center a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

fico credit scores

Answers To Your Most Asked Credit Questions

How Do Negative Items Affect Me?

Negative items on your credit report could be what separates you from that home loan you hoped for or a decent financing for a vehicle. The good news is that if you happen to have these negative items on your credit report, there are still wats to mitigate their effects and even have them removed! Here is a short overview of how long it can take for each negative item to fall off your report!

How Can I Build My Credit?

Everyone’s credit is unique to them and building your credit may require more attention in one aspect over another. Your Fico score is made of primarily of 5 different pieces of credit data: Payment History, Amount Owed, Credit History, New Credit and Credit Mix. Each of these catagories holds a specific weight to your final score and if you are found wanting in one area, then you could be harming the other 4!

How FICO Scores are calculated

Each catagory of credit will build off of each other, but without proper understanding of each catagory, you are not reaching your full credit potential.

Payment History- Payment history is self explanitor: Each payment you make toward a borrowed amount will be relayed to the bureaus and listed on your report. Each on time and late payment will show individually under the items profile.

Amount Owed- Each account open on your report holds a particular weight dependant on the amount owed and the type of account it is. You need to take into account your credit utilzation rate on your current cards, your current debts owed and how many open accounts with balances do you have.

Credit History- Credit history deals with how long you have had your accounts open and an average age of your open acounts.

New Credit- New credit takes into account how recently you have applied for credit in the past year.

Credit Mix- Your credit mix is made up of the different accounts listed on the report. This is anywhere from credit cards to mortgages!

 

 New To Building Credit? Here are 5 Easy Steps To Get You Started!

Collection Accounts, Late Payments and More: Seven Years

Collection accounts, charge- offs, paid student loan default, late payments can all stay on your credit report for 7 years.

Some negative items that hang on your credit report for seven years can impact your score more than others. Older negative items that are followed by exceptional credit history hold a lot less weight on an overall score. Many lenders will assess your score to see you are a safe risk and will view your credit history to see if you are a responsible borrower.

Credit repair can help minimize or remove the impact of some of these items and can even help determine the legitimacy of the items on your report! The creditor should be able to determine the current balance of the account, the initial agreement between you and your creditors, the right to peruse the debt and payment history. If the creditor is unable to produce this information, the odds of you getting the items removed early are increased exponentially!

 

Hard Inquiries: Two Years 

Hard inquiries usually stay on a credit report for about 2 years. Most people have inquired on their reports because they are extremely hard to avoid as they occur when lenders run your credit score. The best way to minimize how often hard inquiries land on your report is by researching prior to making an inquiry and submitting loans applications with a single company at a time. The good news is that if you are comparing rates between lenders in a short time frame, multiple inquiries will only be counted as a single inquiry!

 

Chapter 7 Bankruptcies: 10 Years

A chapter 7 bankruptcy sits on your credit report for about 10 years. The best way to attempt to have a chapter 7 bankruptcy removed from your credit report before the ten-year mark is to undergo credit repair. The credit repair process is to make sure that the information is accurately recorded and all accounts that follow the bankruptcy are taken care of accordingly.

In the End

Creditors do not always send accurate information to the bureaus and accounts can hold a number of discrepancies that could be harming your score!

 

Inquire for free credit review & consultation.

Contact:  1-800-994-3070

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home buying process

What You Need To Know Before Buying a House

Building Buying Power

As the Spring months start peeking through, the home buying market is heating up! Have you been picturing the day when you can paint your own walls and mow your own grass? The dream of homeownership comes with great financial responsibility. Many first-time home buyers have questions about their down payment, and how they can start saving to make that first major purchase. We’ll discuss several organizations that are willing to help you with the financial burden and get you into your own home soon.

The process of applying for a loan can be overwhelming and stressful. Without an excess amount of funds, you may find yourself digging in couch cushions and trying to work extra hours to come up with the funds and savings to start the journey toward homeownership.

There are a few major factors that come into play when getting pre-qualified for a home loan.

  • Credit Scores
  • Income
  • Debt
  • Down payment

Paying Down Debts? │ Not Enough Left For A Down Payment?

If you have been trying to pay down debts or have been in the credit repair process, again, excess funds may be low. After your income has been reviewed by a trusted lender, more than likely you have discussed how much money you will need for a down payment. Did the amount of money sound manageable?

There are a few loan programs that require no down payment like USDA, which you have to meet strict income guidelines for. Another is the VA loan which is only available to eligible Veterans. Let’s say you won’t qualify for either of these, what happens next?

All hope is not lost! There may be help right around the corner, you just have to know where to look. Below is a list of some other options out there to possibly help jump-start the home buying process for you.  

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Down Payment Assistance Programs

For down payment assistance, there may be a household income limit or a limit on the purchase price. Look in your area where you are hoping to purchase. There are some cities will also contribute and help with down payment assistance. You can search on your City website where they may talk about things like how to get grant money or down payment assistance for first time home buyers!

Talk to your lender further about what programs they may know of in the area in order to help you with funds. If you are a first time home buyer, there may be a program for you! Hoping to buy a home in a historic district? There are grants for homes in certain areas of towns where they would like to see the homes restored and rehabbed too.

 

Habitat For Humanity

Habitat for Humanity occasionally partners with homes with income restrictions that are in need of an overhaul and some DIY. For this program, reach out to your local organization to learn about the qualifications and application process or visit their website https://www.habitat.org/

 

Community Land Trusts

Community Land Trusts are also nonprofits that are willing to make the buying process more affordable by selling just the building. There would be a lease on the land that you occupied. In an effort to strengthen and serve low-income families, these Community Land Trusts serve the community and work to create homes that are permanently affordable and last for generations.

 

Ready For Home Ownership?

Throughout the home buying process, there will be so many new things to learn as you become a homeowner.

A few things to start doing in order to take the next step in the process are:

Shop Around For The Best Mortgage

If you are ready to take on home ownership, start looking around at lenders in your area. Consider the pros and cons of a bank, credit union, online lender or mortgage broker.

Be extremely careful as you shop around that you don’t allow each institution to start pulling credit right away!

Apply

Your credit will be pulled at this point by the lender you are using. When you have decided on the best option you will need several documents like your paystub, recent bank statements and tax return documents. There will be many different types of documents that dive deep into your finances. Remember to hold off on applying for new credit, buying a new car or making large purchases before you close!

This can really hurt your credit scores and may cause an issue for your home purchase. If your lender cannot get you pre-approved with your credit scores they may refer you to a credit repair company so that you can work on your scores. Some credit repair companies work with you as quick as they can to get your scores up so you can get back to the lender as soon as possible!

Pre Approval

Once you complete the application, your lender will decide based on the documents you provided. At this point, the lender will let you know how much they are willing to loan. This document is typically good for 60-90 days.

Start Shopping!

Now is the time to grab your agent and start checking out all the open houses and find your dream home!

Make An Offer

Once you find the house you are looking for, your agent will write a contract up and have you sign the purchase agreement.

As you move forward with your home purchase there will be loads of paperwork and numbers thrown at you. Your lender will be your guide throughout the process and will keep you updated on documents they need in order to get your file closed on time. Talk with friends, your agent, and family about lenders they have used. The home buying process is one that can be stressful, but with the right guide, it can be exciting too!

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