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All Of This Is Because Of YOUR Help!

You’ve been so awesome, I wanted to share this. We got approved by a local bank to buy the house we want – now all we have to do is sell ours!!! All of this is because of YOUR HELP! You have been phenomenal and I am truly thankful.

– Jen H.

Restoring Your Credit-Nothing is Impossible (The Cubs and Indians are Playing in The World Series!)

Congratulations to the Chicago Cubs and the Cleveland Indians for winning their respective league’s Championship Series and earning the right to face off against each other in the World Series.

As a lifelong fan of the St. Louis Cardinals, it is somewhat difficult for me to offer congratulations to the team from Chicago’s Northside, the Cardinals’ “loveable loser” rival for most of my lifetime. But, here it is: “Congratulations, Small Bears! Your long suffering fans deserve it! Good luck to you against the Indians!”

How unlikely was a Cubs/Indians match-up in the Series? The Cubs last played in the fall classic seventy-one years ago, they were last World Champions in 1908, an astounding One Hundred and Eight years ago! The Indians last earned World Series Championship rings in 1948, despite the fact that they have competed in the series three times since.

The Cubs and the Indians start their series in Cleveland tomorrow evening. Indeed, anything is possible.

As you enjoy the games between this unlikely pairing, perhaps it’s a good time to consider the things in your life that you consider “unlikely” to happen. Have you given up on the dream of home ownership because of poor credit? Do you think that your credit problems are something that are, “NEVER” going to go away?

Ahem, the Cubs and the Indians are playing in the World Series! Nothing is impossible, especially when it comes to your credit. I have written a great deal about how poorly educated American consumers are about credit scoring. I would hazard a guess that more Americans know the length of Joe DiMaggio’s record hitting streak (It’s 56 games) than know their own credit score.

Here’s an important piece of information for you to know about credit: Generally speaking, your credit score is “forward looking.” Just as the management of the World Series participants have rebuilt them into contenders, you can start to rebuild your credit, TODAY!

Where do you start? (First Base) -The very first thing that you should do is to obtain a current and complete copy of your credit report. You are entitled to obtain a free copy of your credit report every 12 months; here’s a great site for this.

Why start with your credit report? You can’t know the players without a scorecard. It’s the best way to see the “whole ballgame.” It will also tell you what, if any, negative items are being reported against you. Read it carefully — you would be amazed at the number of credit reports that look like they were assembled by Milwaukee Brewers Shortstop Johnathan Villar. (He committed 29 fielding errors this past season to the lead the Majors in that inauspicious category!)

What’s Next? (Second Base)-Make sure that you are paying your bills on time. Nothing damages your credit score as much as late payments. The longer that payments are late, the more damage they do to your score. So, if you’re behind on a payment or payments, make every effort that you can to bring those accounts current and once they’re current keep paying on time. (As Hall of Fame pitcher Tom Seaver said: “If you dwell on statistics you get shortsighted, if you aim for consistency, the numbers will be there at the end.”)

Then What? (Third Base)-Pay down the balances on any credit card debt that you might have. Credit utilization is one of the major factors used in determining your credit score. Good credit utilization means that you use credit, but you use it responsibly.

Ideally, the credit scoring formula looks for you to utilize 30 percent of a credit card’s limit or less. So, take the winnings from the wager that you made that the Cubs or Indians would make it to the World Series and pay down any credit cards you have where the balance is in excess of 30 percent. Do so, and you can expect to see your credit score begin to increase like Nolan Ryan’s strikeout total. (The Hall of Fame pitcher struck out an amazing 5,714 batters over the course of his big league career!)

Score! (Home Plate)-Doing the things that we have discussed as you “rounded the bases” will significantly help you to rebuild your credit score to a Championship level. There is much more that you can do to strengthen your score. Just like it did for the Cubs and Indians, the process involves dedication and hard work.

One of the key components of the Cubs’ and Indians’ successes was the hiring of a skilled, knowledgeable manager. You may want to investigate hiring a professional, reputable credit restoration company to help manage you along the path to better credit. A well-qualified credit restoration company will provide you with important guidance as to how to address negative items that appear on your credit report, help you to maximize your credit utilization, teach you how to acquire and properly utilize a secured credit card, and help you with negotiating collection accounts.

Enjoy the Series! Good luck to both teams!

Thinking About a New Home? Start with a Credit Appraisal

This blog is also featured in The Huffington Post.

Dreaming of purchasing a new home in the next several months? Whether you are a first time home buyer, upgrading to a newer or bigger home, or downsizing into a smaller residence, the first thing that you should do is have your credit appraised.

Today’s real estate market is one that should only be entered into as an educated and fully prepared buyer. Demand is high in today’s market, and available home inventory is low. If you are not educated and well-prepared to make a firm offer, your offer will get less consideration from a seller than an offer from a customer who is ready to proceed to closing.

Can you imagine the anguish of finding the perfect home for you and your family, at the perfect price, only to discover that there is a credit problem that will keep you from securing a mortgage on that home? Credit issues often take time to resolve – weeks, if not months – could pass before you can successfully resolve your credit problems. Chances are, the perfect house with the perfect price is going to be sold to another buyer in today’s market.

How do you avoid that sort of disappointment? It’s simple, start with a credit appraisal! A credit appraisal is a thorough, detailed review of your credit history by an individual with expertise in reviewing credit reports, as well as detailed knowledge of mortgage underwriting standards.

An appraisal is just not about your credit score. You can have a high credit score (even in the 700s), but still have items on your credit report that will block you from being approved for a mortgage. We see these type of challenges at our credit restoration company regularly.

It is vitally important that your appraisal include credit history and a credit score from each of the three prominent credit reporting agencies (Transunion, Equifax and Experian). Mortgage providers look closely at the reports from all three of these agencies, and frequently accounts that are reported by one bureau aren’t being reported by the other two. If a derogatory item shows up on even just one of the reports, it is likely going to be an obstacle in your mortgage pursuit.

Credit history, alone, like the one you are able to obtain for free once a year is not enough. It is also essential that you have scores from all three bureaus reviewed.

It is imperative that these three scores are FICO mortgage scores. Believe it or not, there are all sorts of different credit scores out there today, and not all of them are the type of scores that are used to determine your eligibility for a mortgage. FICO (an acronym for Fair Isaac and Company, who now simply call themselves “Fair Isaac”) is a scoring model, or mathematical algorithm, that is purchased by credit bureaus and used to compute your mortgage credit score.

That score that you get for free, on your credit card statement or from online credit monitoring services? More than likely, it is not a FICO mortgage score. Other credit score models used by those companies can be as much as sixty points different from your real FICO score (we see it all the time).

Why does an accurate credit appraisal require all three scores? Mortgage companies use something called your middle score. I wrote about it in detail, here: The Shamrock and Your Credit Score, a few months ago. In short, your middle score is not an average of your three scores, and it’s not even the median of those scores. Mortgage companies and banks “throw out” your high score and your low score – sort of like how Olympic diving and ice skating are scored. They look solely at the middle of your three scores to determine whether you meet the credit score portion of their underwriting standards.

Even if your appraisal indicates that your credit score is high enough to qualify for an entry level loan (like an FHA loan) you may have the time and the opportunity to strengthen your score to a point where more favorable loan products might become available to you. Your time will be well spent building your credit score while you shop for your new home.

Once you have had your credit appraised and certified as credit qualified, you are “Real Estate Ready.” It’s time to take the next step and proceed to your bank or mortgage company for pre-approval.

Not to be confused with a pre-qualification, which is essentially a “rough” calculation of how much of a loan you might qualify for, a pre-approval is a written estimate from a lender stating how much you will likely be able to borrow based on your (now certified) credit and other financial information (like your earnings history.)

The application for a loan pre-approval often requires submitting pay stubs, bank statements, tax returns and other financial documents. Most lenders charge nothing for the application, since they are hoping to win your business, but some charge you (usually less than $100.00) to cover the cost of a credit check.

A credit appraisal will not only spare you from disappointment, it will also save you time. Why spend your valuable time with a realtor or lender, only to be told that your credit doesn’t qualify you to buy a home. With a certified credit appraisal the question, more often than not, changes from “Will I qualify for a loan?” to “How big of a loan will I qualify for?”

Get your credit appraised today. Knowing that you are “Real Estate Ready” and being certified accordingly, will provide you with significant leverage when you are ready to make an offer on a home. It provides assurance to the seller that you will be able to secure financing and makes your offer significantly more attractive than an offer that is contingent upon financing being secured.

Does a loan officer have a duty to disclose receipt of a “referral fee” from a credit repair company?

Some credit repair companies obtain their customers by paying “referral fees” to loan officers who have turned those customers down for a loan.
By necessity, a credit repair company passes those fees on to their credit repair clients. That’s how business works.
That creates a potential pitfall for a referring loan officer. They, and by extension, the company that they work for are receiving “income” for that referral. That is why the credit repair company that paid them a referral fee last year probably sent them an IRS Form 1099 for that payment this past January.
Does the Real Estate Settlement Procedures Act, (Title 24 CFR section 3500 et seq.) require that you disclose that income to your mortgage loan customer, should the credit repair company properly return them to you ready for a mortgage?

Think about it…

If a loan officer is sending someone to a specific credit repair firm, and:

1. Telling them that they “need” to have a higher credit score in order to qualify for a mortgage loan, and
2. The cost of that credit repair service is higher for them because of the fact that the loan officer and or his company were paid a “referral” fee
-Is that cost fully and accurately disclosed to the customer in the loan settlement documents?

In effect, isn’t the customer paying more to obtain a loan than they would have had the loan officer not received a referral fee?

In the interest of “full disclosure”, should that referral fee  be reflected on the Settlement Statement ( HUD-1)?

 

 

I Couldn’t Be More Pleased

Phoenix Credit Consultants did everything they say they can do and more. I needed to repair years of bad credit, so after researching a few different companies and getting a very good referral from a friend about PCC, I went ahead with the process. It’s been about six months and I’ve gone from a credit score in the high-500s to over 700. I couldn’t be more pleased. I recommend them to everyone I know with credit issues.

John K.

 

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They Went Above And Beyond

Phoenix Credit Consultants was an unbelievable help. Not only did they assist me with all of my needs, they went above and beyond for me. I would absolutely recommend this company to anyone, and will utilize them again in the future.