In the real estate industry #Cashisking and #CreditisPower. It does not matter how much money you make, if your #creditscore is low, then you will have problems renting or buying. If you try to rent and your credit score is below 600, the landlord will probably want a double deposit. If you apply for a mortgage loan and score is below 600, the loan officers will probably turn you down. The lower your score, the higher your rate of interest will be. It will also be difficult to qualify for first time home buyer programs or no down payment loan programs. As of July 1st, 2017, the credit bureaus will exclude the tax liens and civil debts, if the obligations do not include consumer names and addresses. This will help a lot of people.
Low credit scores cost money. If you have an excellent credit score of 720 to 850, you will not be penalized with a higher interest rate. If your score is 719 to 620, you can be penalized up to $40,000 on a 30 year loan. If your score goes from 619 to 500, you can penalized up to $105,000 on a 30 year loan. These are the steps for fixing your credit to buy a house.
1. Find out what your #creditscore is from Credit Karma.com. However, beware that loan Officers use different qualifications to figure out your score, so it could be lower. Credit Karma will be able to tell you what is on your report. Loan Officers use a fico score. The fico score takes the following into consideration: payment history, late payments on mortgages, rent, credit cards, auto loans, balance on credit card(no more than 30%), length of time you have been using credit, how many sources of credit that you have. If you have a credit card with a limit of $1000.00, you balance should be less than $300.00. A consumer report which is what you get from Credit Karma. A consumer score is a measure of how you compare to others. It is usually at least 100 points than your fico score which is what a lender uses. Consumer or Credit Karma scores are not accurate, but they give you an idea of what your score is. And it tells you what is on your report.
2. #DeliniquentCreditAccounts–If you have any accounts that are late, you need to get current on them. Late and missed payments can cause your credit score to drop 90 to 110 points. Get automatic payments to get your payments current.
3. #DisputeCreditErrors–Eighty percent of the information on people’s credit reports is erroneous. If you find errors on your reports, call me I will help you write letters to dispute the errors. Once the credit bureaus receive the dispute they have 30 days to investigate and respond. If the bureaus do not respond within 30 days, then by law that erroneous information must be deleted. It is the law.
4. Have disputed accounts removed–If you had accounts on your report that were disputed call the creditors and have them removed. I can help you get those of your report.
5. Pay off balances–If there are any balances that you can pay off, pay them off. Do not close the accounts. We can get the status changed to “paid as agreed” which looks good on your report. This helps your debt to income ratio.
6. Pay your bills on time–I cannot emphasize the importance of paying your bills on time. It looks good on your credit report. It helps keep your credit score high. Get automatic payments to make sure your bills are paid on time. Loan Officers do not want to see late payments, collections, and charge offs on your credit report.
7. Do not close Accounts–Pay off your bills and keep everything open. It helps your debt-to-income ratio.
8. After you complete the first seven steps listed above. Find a loan officer that has simulation software to tell you exactly what you need to do get the score you need to purchase a home. If you need help finding a loan officer that does not charge for this service, call me, I know plenty. Liz Conrad from Atlantic Coast Mortgage can help with this.
This blog is written by Real Estate By Jane: We are able to help people who have credit issues buy homes.
We are home buying/credit specialists who know how to successfully help people who have been pushed out of the housing market by no fault of their own become home owners again. These people could have been pushed out by job layoffs, divorce, medical illness, etc. We also help single parents to find safe affordable housing. We offer traditional real estate services in Northern Virginia. To inquire about our services, please call 703-606-7963.