How Much Does Bad Credit Cost You?

April 19, 2013 by 4 Comments

bad credit

We saw this recently and thought it was an accurate depiction of the fact that scores under 720 hurt you in the pocketbook these days!

To create your mortgage credit score, the credit scoring system analyzes various elements of your current credit situation, including your debts, payment history, and credit types.

secured credit-cards can helpIt’s important to understand that payment history accounts for only 35% of your overall score, so it takes more than paying your bills on time to increase your score. In today’s market, a score of 620 or below would be cause for concern, because even a small difference in your credit score can cost you big.

In fact, Fannie Mae announced earlier this year that any loan in which the borrower’s FICO score falls below 680 will incur either higher interest rates or fees charged at the time of closing of up to 2.00%. For example, on a conventional loan amount of $300,000, a borrower with a FICO score of 680 or lower, would be required to pay $4,000 or experience a higher interest rate. This means clean up your credit now or pay a higher price later.

For more information on your credit score, contact Steve and Eleanor Thorne, Mortgage Bankers in Cary , 919-649-5058. Connect with us on Facebook!

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4 Things U Can Do NOW!

April 18, 2013 by 12 Comments

cary mortgagesIs your credit picture lookin’ kinda bleak??

Relax – if we work together for the next 6 months – we can get you in a much better position!

No matter what your credit picture – 6 months of work will general improve your scores by 100 to 150 points.  Here are 4 things to do from the start:

  • Stop using your credit cards. You might need to take PB&J sandwiches to work everyday – you might not get new shoes for Easter – but you’ve got to break the habit of spending credit, and work on a cash basis for all purchases.  If you are an impulse spender, like me, there’s an easy trick.  Take your credit cards and put them in a plastic container.  Fill the container up with water.  Put it in the FREEZER.  Now – if you melt the ice in the microwave it’s going to mess up your little strip on the back… but if you NEED your credit cards for new tires (for instance) you can wait the two or three hours for them to thaw.  If you WANT a new dress for a date – you will be more likely to call a girlfriend an BORROW something! [Read more...]
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Time and Credit

October 27, 2012 by 3 Comments

FICOWhen you are trying to increase your credit score – TIME is a big factor.

How long has it been since you missed a payment.  For Car Loans and Mortgage Loans – that number MUST be 12.  Meaning you have NO LATE PAYMENTS in the last 12 months.

Right now this is the most important part of increasing your credit score.  Every month past that 12 month period helps get your score higher… [Read more...]

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7 Things That Can Hurt Your Credit Score

October 7, 2012 by Leave a Comment

What's Your Home In Cary NC Worth?Depending on where you are in your life, you might be ready to improve your credit scores.  Many people in America are realizing that great scores are made over time – just like healthy living, it’s the “conscience” decisions we make that are so very important. We see 7 things everyone should be aware of when trying to figure out what will help create a better credit Score.

“Success on any major scale requires you to accept responsibility . . . . In the final analysis, the one quality that all successful people have is the ability to take on responsibility.” [Read more...]

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Medical Collections and FHA Mortgage Change July 1, 2012

May 18, 2012 by Leave a Comment

cutsMedical Collection Boo-Boo’s are usually the hardest things to remove from a credit report, even though the Fair Credit Reporting Act does have pretty strong language about them.

The final rule of HIPAA (the Health Insurance Protability and Accountability Act) makes sharing personal medical record informations illegal with with the public. Remember all those forms you now sign when you check into the doctor’s office – that’s what it’s about.

The rules of HIPAA specifically includes past, present and future payments of health care.  Meaning, it  is pretty much impossible for Medical Providers to take out Collections and Judgements against people who owe them money.  If they did, I would know, when looking at your credit (for instance) that you owed the Cancer Center money, or a Psychiatrist…  I could make assumptions about you because of that debt, and it could cause you to be viewed differently for jobs.

The way most people get collections is because of co-pay. They go to the doctor, pay their co-pay – and then leave the rest to the insurance company.  When the insurance company does not pay all of the bill, the balance owed to the doctor is assigned to a collection company, and added to your credit report from the Collection Company (thus masking who the medical provider is).

These collections DO pull your credit score down – AND starting on July 1, 2012 – FHA was going to  begin requiring that you settle with your medical creditors in order to get a mortgage loan… that includes your MEDICAL collections too!  This is going to be especially tough for some folks, and is a HUGE change in direction for FHA!

For the past 30 years or more, Medical Collections were not required to be paid (in most cases) to get a FHA Mortgage Approval.  I’m not arguing that people should be allowed to skip bills to their doctors (at all). However, being in this business as long as I have – I’ve seen some pretty egregious situations where people were in an Accident, a doctor made a mistake on the delivery of a child, someone was hurt on the job – and they were in the process of disputing who was responsible for paying what.

With this latest move – there were to be no exceptions.  

This underwriting guidelines was RESCINDED on June 15, 2012 – and will not immediately go into effect on July 1, 2012 as planned.  However, we expect FHA to provide more clarification on this topic, and we will not be surprised if Medical Collections are part of a new round of underwriting “tightening” that happens later this year!  FHA Mortgagee Letter delaying that Medical Collections be paid

If you are considering a mortgage loan, please contact Steve and Eleanor Thorne, 919-649-5058 – or connect with us on Facebook!  We work with people every month who had some credit issues, cleaned them up, and then were able to buy a house!  Don’t give up! We can help you do this!!

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Does The Balance On Your Account Matter?

February 4, 2012 by Leave a Comment

new home sales apexI recently read a report that said:

“Several of my clients are in the credit restoration business and a recent conference call with some of the heavy hitters in the business revealed an astonishing new update to how the FICO score is computed.

Balance management – that is the practice of getting the “balance to available credit” (similar to ltv) below 50% and ultimately to below 30% for maximum benefit, “NO LONGER appears to improve the score” was the quote on the conference call. It was a common, and very simple way to get a few point increase in FICO score was to transfer balances accross cards, or pay down across cards to get the balances below 50 and 30% of the available credit line. Another common practice if there was no room on other cards or no cash to pay balances down was to call the credit companies and request an increase in the available credit limit – which would result in an improved ratio and a better score. It appears this is NO LONGER the case.”

In review of our recent files… we do not feel this is accurate information.  Our files show that folks who pay their accounts down to at lest a 50% level do have an improvement in their scores.

Don’t be fooled by those who don’t have many clients, are not working full time in the business, and just plain don’t know…  Steve Thorne at Mortgage Banker in Cary 919 649 5058  if you want to buy a house and need more information!

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Credit Score Basics – For First Time Homebuyers

January 31, 2012 by Leave a Comment

We were able to ask Ken Venable with CREDCO about FICO Scores and what the fallacies and models used today. We are hoping to clear the air – because there’s so much information available now… and some of it is just plain misleading.

For instance the “Free Credit Score.com” jingle that folks listen to, and then PAY for doesn’t have a matrix that is anywhere close to the “Mortgage” matrix we must use to score you! We’ve seen many people who thought their credit score was “up” to 640 – when we pulled it and found that the score was actually 618, the customer thought we were crazy!  We weren’t… there’s just a difference between a Mortgage Report Score, A Medical Credit Score, and a Retail Credit Score.

Each credit bureau uses a “Score Logic” that is slightly different from one agency to another. Meaning that if 4 different people pull your credit, you might get a slightly different score – especially if the person pulling your credit doesn’t note that you are a junior… or if they have the wrong zip code!  That’s right, entering the wrong street address can change your score, slightly.

A credit report is just a snapshot in time… think about someone taking a picture of you in one day.  Well, they might get a picture of you at Starbucks, at your desk, in a meeting – you move during your day. Creditors can submit information to the Bureaus on any given day at any given time – so the snapshot (or pull of your credit) on a given day by different people might have slightly different scores.  It doesn’t happen often – but it can happen. [Read more...]

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Closing a Credit Card??

January 19, 2012 by Leave a Comment

credit cardsIf your trying to decide what to do with all that cash Washington is sending you in the next few weeks… you might also be looking at your credit report to see how to use that money more effectively.

In today’s environment we don’t usually suggest that folks close credit cards with no balance, but if that’s a decision you’ve made, here are some tips on how to close them the “right way:”

Contact Customer Service – The number should be on the back of your card.  Tell the representative that you are closing the account.  It’s their job to try and get you to keep it open, but if you’ve decided this is the right course, stay firm with them.  Make a note of who you speak with, the date and time (I normally write this on my bill).

Follow up in writing – be sure to include the information about who you spoke with, and request that your credit be updated to show that the account was closed at your request.  Ask for a reply in writing for your records.  We suggest that you send this letter certified return receipt requested.

Recheck your credit report 60 days later.  The changes should be reflected.

If you are considering a home purchase, and you have credit scores that are ALMOST there, but not quite… call us!  Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.

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Your Balances and Best Scores (part 3)

January 7, 2012 by Leave a Comment

We’ve been doing a series on Credit Score Basics, and how to get the best credit score… for the first part click here – and for Part Two of the series, click here.  This is a TON of free information on how to improve your FICO credit score.

Maximizing Your Balance for the BEST Credit Score

With regards to how much your balance should be as compared to the actual high limit… the current model says that 25% – 30% of available credit is the optimum number. So keeping a zero balance on all of your debt will NOT help your score!  You need to have about a 30%  ratio.

Dusting off your “older” cards will raise your scores as well. They must be used every 6 months to count in your score. Pay it off – but use the card every 6 months or so. [Read more...]

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How Scores Work (Credit Score Basics 2)

January 6, 2012 by Leave a Comment

minimum credit scoresWe are doing a series of posts on how your credit score works… meaning, how do they come up with the number? We covered the fact that there are different “Models.”  This means that not only do the three repositories (the “data banks” of information which is really what the 3 credit bureaus are) have different ways of coming up with numbers… they come up with different numbers for your Medical Credit Score, a Mortgage Credit Score, an Insurance Credit Score, a Retail Credit Score – and the one they use if your a looking for a job!  (there might be others these are the ones I am familiar with).

As of  October 2012 Credco analysis shows the average credit score in America is now 690. WOW!  The other interesting thing to me was how many people did not have enough credit to have a score! [Read more...]

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