Credit Score Improvement Strategies

“BAD CREDIT” Purchase or Refinance

If you think your credit isn’t good enough, your credit scores are too low, or you have a recent bankruptcy, there are many great programs you may have access to and don’t know it.

FHA and Conventional Loans have been updated to today’s market to provide access to a wider range of “bad credit” borrowers. Additionally, if you’re a homeowner and have equity you can access cash instantly with a No Qualifying Hard Money loan. If you can’t purchase or refinance now, let her help you prepare for a future loan.

PURCHASE OR REFINANCE NOW Even if you have a Chapter 13 Bankruptcy

That’s right! You can Purchase a home with 5% down. You can Refinance to pay off your Chapter 13 re-organization of debt, lower your mortgage payments and even get some cash out. A 30 year fixed with a great interest rate is available if you have a good history of paying your payments on time to the BK Trustee. Please call Teresa for a personal consultation.

REPAIR YOUR OWN CREDIT
If you are not in a hurry and have a handful of late payments and/or open collections you can take care of credit items by writing a dispute letter to the credit bureaus. The credit bureaus have 30 days to get a response back from the creditor reporting the derogatory item. If the creditor does not respond within 30 days or cannot verify the derogatory item, it is removed. Outlined below are the simple steps to repairing your own credit. This process costs only the postage and takes 2-12 months.

1.  Obtain a copy of your credit report.
2. Write a cover letter itemizing all of the items you are disputing. Example: I was never late on this account, etc.
   Attach a copy of any proof to document that the items you are disputing are not yours (if available). Example: Letter from Chase showing you were only an additional cardholde
3. Attach a copy of your credit report, a copy of your driver’s license, and a copy of your utility bill.
4. Wait 30 to 60 days until all the investigations are complete.
5. Evaluate your success and begin the process again. (Note: not all derogatory items will come off the first time; you may have to do this several times).The three credit reporting bureaus are

Experian	Trans-Union	Equifax
P.O. Box 2002	P.O. Box 1000	P.O. Box 740241
Allen, TX 75013	Chester, PA 19022	Atlanta, GA 30374
888.397.3742	800.888.4213	800.685.1111

CREDIT REPAIR COMPANIES

If Teresa is unable to help you with your credit and she recommends a professional Credit Repair Company, you can usually purchase or refinance in 30 to 60 days.

Credit Repair Companies specialize in removing all types of items from your credit report. Right after a Bankruptcy it’s wise to do a “Bankruptcy Reorganization”, to get all of the derogatory items showing late or charged off after the Discharge Date eliminated. Any items included in a bankruptcy should show “included in the bankruptcy” on the credit report. This helps your credit heal faster and your scores improve higher.

Foreclosures, Judgments, Bankruptcy, Liens, Repo’s, are all items that should be handled by a professional and can be permanently removed successfully. Teresa personally recommends Credit Repair Rehab to all of her valued clients.

Please contact Teresa for a personal recommendation 909-920-3500

AFFECTS OF FORECLOSURE TO YOUR CREDIT AND ABILITY TO OBTAIN A NEW MORTGAGE

Foreclosures count from the actual sale date. Conventional guidelines say the wait period is 5-7 years, FHA says 3 years and most Alt A products are 3-4 years. Teresa Tims recommendation on a Foreclosure is to get it over with as quickly as possible. Give your credit time to heal so that you can purchase again.

FORECLOSURE TYPES
Deed in Lieu of Foreclosure

Simply put, means giving the house back to the bank by executing a Grant Deed. Best on your credit score if you can pull it off without incurring a mortgage late payment. This causes the least impact to your credit score of the 3 Foreclosure types. When purchasing or refinancing mortgage lenders will view this act as a Foreclosure. It is best to hire a credit repair professional to delete this item of record. It is probably the easiest to remove.

A Deed in Lieu of Foreclosure is not a simple task. Each lender is different. You must contact your lender to determine what their course of action is. Usually they will want to know that you have made attempts to sell the house and they may want a hardship package completed similar to a short sale which is a 45-60 day process.

Short Sale

Negotiating with the bank to settle for less then what is owed is called a Short Sale. Depending on how many late payments you have will determine how severely your credit score is affected. Ninety day late payments have a significant impact on your credit score, additionally lenders look at a 90 day late payment the same as a Foreclosure when rendering mortgage credit decisions. If a 30 or 60 day mortgage late payment is reported it will have less of an impact than a Foreclosure. So the key for keeping your credit score intact is to go through the short sale process with as few mortgage late payments as possible.

Lenders will look upon a Short Sale the same as a Foreclosure and will require a wait period before issuing a new mortgage. If you get this item deleted entirely by a credit repair professional your credit score won’t be harmed. Short Sales are a 2-4 month process.

Foreclosure

A foreclosure is hardest on your credit and hardest to get rid of in credit repair. Your lender reports a 30, 60, 90, & sometimes multiple 120 day late payments and legal notices are served. The process is as follows; you cease to pay, the bank records and serves a Notice of Default (NOD) explaining what you need to do before they foreclose. If you do not pay the mortgage up to the current date a Notice of Sale (NOS) is recorded and served, then the property is sold. This is an approximate 120 day process total or longer. Teresa highly recommends a credit repair professional to help remove this derogatory item from your credit.

Additional Quality Articles on Credit Repair
6 Ways to Quickly Boost Credit Scores

“Individuals can positively affect their credit scores in as little as three weeks,” says Edward Jamison, A Los Angeles-based credit attorney. “It’s just a matter of getting educated and focused on the best, fastest, and most reliable course of action.” Jamison, who you may know as a credit expert on the NBC show, “Starting Over,” offers these six tips for improving credit strength quickly.

1. Know your limits. Borrowers should first check their credit limits and evenly distribute the balances they’re carrying to help increase their credit scores, or better yet, pay them off in full to get the highest score increase. “Make sure your maximum limit is reported,” Jamison says. “When no limit is reported, credit scoring software presumes the account is maxed out.”
2. Bring the balances near zero. The credit scoring software scores more favorably to those with a closer balance to zero. Balances over 70 percent damage credit the most, followed by the next tier of 50 percent and then 30 percent of the maximum credit limit. “Rather than carrying a large balance in an unfavorable tier, redistribute outstanding balances over several credit cards, “advised Jamison.
3. Don’t cancel your cards. “Closing credit card accounts can hurt your score unless the accounts were opened less than two years ago, and you have over six credit cards,” Jamison says. Fair Isaac’s credit scoring software assumes that people who have had credit for a longer time are at less risk of defaulting on payments.
4. Eliminate late payments (but ask nice). Get rid of late payments listed on the credit report. “Contact the creditors that report late payments and request a good faith adjustment that removes the late payments reported on your account,” Jamison says. The creditor may work with you, but it may require more than one phone call; patience is required. Your odds of success will dwindle if you’re rude or unclear about your request, he adds.
5. Get rid of collection accounts. But only if the collection agency agrees to delete them in return. Paying them off can otherwise actually lead to a deceased credit score. The consumer should contact the collector and request a letter explicitly stating the agreement to delete the account upon receipt or clearance of the payment, Jamison says. Not all collection agencies will delete reporting, but it’s certainly worth the effort.
6. Pay off past due amounts on accounts that are not in charge-off status. After that, Jamison advises getting rid of charge-offs and liens that are less than two years old. “Charge-offs and liens that are older than 24 months,” says Jamison. “But if they’re newer than 24 months, they can seriously damage your credit.” If you have both charge-offs and collection accounts, but have limited funds, pay off the past due balances first, they pay collection accounts as long as the collectors agree to remove all references to credit bureaus.

Market Watch- Realty Q&A
A 6-step plan for boosting credit score to buy a home

WASHINGTON (MarketWatch) – Question: I need some assistance in cleaning up my very poor credit score of 638 from Trans Union and 559 from Equifax. It’s not the result of any credit cards but poor choices (which I admit) and a divorce with little to no child support of three girls. I’m in my mid-forties and all three girls are over the age of 18.

My question is how do I increase my FICO score within the next 6-10 months and is there a reputable agency that can work on my behalf? I would like to purchase a home early next year. I know there’s a lot of work that needs to be done and would greatly appreciate any assistance you or an agency can provide.

Answer: I turned to attorney Edward Jamison, who operates a credit-repair law firm in Los Angeles, for help with this one because you did not mention any specific problems. His reply was far more detailed than I had expected, and I learned a lot from it. For starter, Jamison says “there is hope” for all divorcees whose credit has suffered as they try to raise children by themselves, often without financial help from the former spouse. He offers the following six steps to raise your score. If one or more steps don’t apply, just ignore them:

1. Settle collections

The best way to handle this credit-scoring dilemma is to contact the collection agency. Explain that you are willing to pay off the collection account. Under the condition that all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states its agreement to delete the account upon receipt/clearance of your payment.

Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase your score and is certainly worth the effort involved.

2. Get rid of the “black marks’

Credit-scoring software penalizes you for keeping accounts past due, so “past dues” destroy a credit score. Consequently, pay the credit the past due amount as reported. However, if the creditor has the account listed as already charged off or in a collection status, it is better to try to settle for a deletion with payment because a paid collection or charge-off is not much better than an unpaid collection or charge-off.

Jamison also advises that whenever someone has limited funds available to pay on their accounts, they should try to apportion their funds toward settling the newer collection or charge-off accounts before the older ones because the older the account, the less the effect on the credit score. Also, charge –offs and liens do not affect your credit score as much once they are older than 24 months. “Therefore,” the credit expert says, “paying an older charge-off or a lien won’t help your credit score nearly as much as if it were a newly charged off debt.”

On the other hand, charge-offs and liens that have occurred within the past 24 months severely damage your credit score and should be settled as soon as possible. The Southern California attorney says paying the past due balance on charge-offs and collections usually means paying the entire amount because the only way to bring a past due collection or charge-off account current is to pay it in full or settle it for less than the full balance and bring it to a zero balance.

If you have both charged-off accounts and collection accounts—but only a limited amount of money to pay them—Jamison suggests you apportion funds as follows;

First, pay the past due balances on accounts that are not in collection or charge-ff status. For example, those that are only a month or two behind.

Second, pay collection agencies that agree to remove all references of your accounts to credit bureaus.

Third, although not related to past due balances, pay off your credit cards that are open and revolving. This is third in order of importance because it will help your credit score a lot more than paying or settling unpaid collection or charge-off accounts that the creditor will not agree to delete with payment.

Fourth, pay or settle the remaining collections or charge-offs that are unpaid but the creditor refuses to delete with payment. It still makes sense to settle or pay these because not doing so can lead to a lawsuit. The debt gets sold to a different collection agency. Which will cause more negative reporting and will reduce your credit score.

“I am trying to help your get the highest score possible and prioritize the advice based on the assumption you may not be able to do all four,” Jamison says. “You should do all four if you have the money, but follow the order of importance outlined here to get the most out of your credit score when you can’t afford to do everything mentioned.”

3. Clean up late pays

Contact all creditors that report late payment and request a good faith adjustment that removes the late payments reported on your account. “Be persistent if they refuse to remove the late pays,” the credit expert emphasizes. “Remind them that you have been a good customer that would deeply appreciate their help.”

Since most creditors receive calls at a call center, if the person you speak with refuses to make a courtesy adjustment on your account, call back and try again with someone else, or ask for a supervisor. “Persistence and politeness pays off in this scenario,” Jamison warns. “If you are frustrated. Rude and unclear with your request. Most likely you’re making it very difficult for them to help you and probably won’t succeed.”

4. Get even

If you can’t pay off your credit cards, check your card limits and evenly distribute the balances. Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software score the account as though your current balance is “maxed out.”

For example: if you know that you have $10,000 limit on your credit card. Make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit-scoring software likes to see you carry credit-card balances as close to zero as possible. If it is difficult for you to pay down your balances, follow these guidelines to maximize your score as much as possible under the circumstance:

Balances above 50% of your total credit limit on any card damage your score the most. Try to bring all balances below the 50% level right away, paying off your credit cards completely is best. But when your financial situation prevents that from happening, try to evenly distribute the debt you have. In other words, distribute the total of your outstanding credit-card debt among all your credit cards rather than carry a large balance on one. For example, if you are carrying a $6,000 balance on a credit card with a $10,000 limit, and you have tow other credit cards with $3,000 and $5,000 limits, respectively, transfer your balances so that you have a $1,000 balance on the $3,000 limit card, a $1,666 balance on the $5,000 limit card and a $3,333 balance on the $10,000 limit card. Now each card is at a third of its limit.

5. Remain open

Closing a credit card can hurt your credit score, since doing so affects your debt-to-available-credit ratio. For example: if you have a total credit-card debt of $10,000 and the total credit available to you is $20,000. You are using 50% of your total credit. If you close a credit card with a $5,000 credit limit. You will reduce your credit available to $15,000 and change your ration. So now you are using 66% of your credit. Jamison says the “magic number” of credit-card accounts to have in order to maximize your score is between three and five. Having more will not significantly damage your score, but he advises not to close credit cards at all to be on the safe side.

6. Remain active

If you are like most people, you have long forgotten credit cards that are still open but just haven’t been used for a while. Look at your credit report to see if this is the case. 15% of your credit score is determined by the age of the credit. Jamison points out that credit, scoring software assumes people who have had credit longer are at less risk of defaulting. Therefore, even if your old credit cards have horrible interest, closing those cards will decrease the length you’ve had credit.

The expert suggests using the old card at lease once every six months to avoid the account becoming inactive. Keeping the card active is a simple as pumping gas or purchasing groceries every few months. Then paying the balance down.

“An inactive account is weighted less by credit-scoring software, so you won’t get the benefit of the positive payment history. Mostly low balance that card may have,” the attorney says. The one thing all credit reports with scores over 800 have in common is a credit card that is 20 years old or older. Hold onto those old cards, and use them at least once every six months, to keep them active.

Finally, Jamison warns that repairing credit is “a slow and time-consuming process.” So don’t let it get you down. You didn’t get into trouble overnight, and you are not going to get out of trouble overnight, either. Be persistent.

Also key to the process. The expert calls it “pivotal”. It is full knowledge of your credit profile. How it represents you to creditors and credit bureaus.

There are reputable companies out there that can help you repair your credit. However  you have to be careful because many are not on the level. Jamison says “anyone who promises you a ‘certain’ result is lying. There’s an element involved in credit repair. Nothing is a guaranteed.”

At the same time, though, when you know what you are doing, the success rate overall is much higher. Make sure you get in writing everything the company says it is going to do for you. Also, what guarantee they offer, if any.

Check out more of our blogs to guide you