Posts Tagged ‘Credit Repair’

5 Important Factors that Decide Your Credit Score

credit report sign

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage.

The following factors affect your score:

1. Your payment history.

Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe.

If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history.

In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have.

New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use.

Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

If you feel you need some help with your credit score or would like to fix your credit report, it is best to consult with a specialist.  Find out your options before it’s too late.

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Top 5 Answers for Homeowners about Strategic Mortgage Default

walk away, strategic mortgage default

1. Should I intentionally default on my home mortgage?

Today, many people are ‘intentionally’ or ‘strategically’ defaulting because cash is more valuable than credit. Because many of the banks were unethical, some borrowers don’t feel the ‘moral obligation’ to pay, especially when the banks are being less than cooperative as buyers try to work things out. Rather than defaulting, the best thing to do is use the Section 702 program of the Obama act, which allows a qualified third-party buyer to take possession and make a ‘bona fide’ offer to the bank. This helps show the debt ‘settled’ on your credit and can eliminate the second mortgages completely. Walking away and allowing the bank to foreclose still allows the second lender to render a judgment—and possibly garnish your wages. You may also have to file for bankruptcy to recover from the credit nightmare.

In addition, it is always best to gain the most knowledge to make the best decision for yourself and your family.  There are great workshops and seminars that reveal the different programs the are available to homeowners and discuss the pitfalls people may encounter.  For specialized assistance in saving your home, consult a specialist and discover real options that fit your scenario.

2. As a borrower, what are some ways I can gain leverage with my mortgage holder?

One way to gain leverage with a lender is to establish a ‘substitute mortgage’—a security pledge that is offered to the seller’s lender, with a third party (lawyer or Escrow company) for a lesser amount of the current payment. Over time, this will result in a significant amount of collected funds that can be used as negotiating leverage to release the borrower from the debt, or dictate terms for a loan modification in the borrower’s advantage.

3. Why have loan modifications and foreclosures become the predominant answer for so many in distressed property situations, and why can this be problematic?

The reason why loan modifications and foreclosures have become the answer for so many is because many real estate professionals erroneously consider the short sale process to be too complex. Not knowing how to orchestrate the transaction and not having the correct forms and contact information with all the different parties is overwhelming for many Realtors, so they forego an option that would otherwise be in the owner’s best interest. The result is unnecessary spending of tax payer’s funds that are being used for the alternative solutions, when capital contributions from the ‘street level’ can be used to offset the losses and payoff the delinquencies without requiring such taxpayer contribution.

For specialized assistance in the short sale process, consider discussing your options and the entire process with a specialized short sale consultant.

4. Why is a short sale strategy more advantageous than a loan modification or foreclosure approach?

The reduced payoff in a short sale can release you from the debt obligation. This allows you to re-establish your credit faster and re-enter the market much wiser. A loan modification actually builds a debt trap around the borrower who is emotionally attached to a property, milking the borrower for every last nickel. A foreclosure ruins a homeowner’s credit and takes a much longer time period to recover from.

If you find out you need more work to fix your credit, consult with a credit repair specialist to discuss your options and find out what is right for you.

5. I’ve heard borrowers in default need a ‘General Public Disclosure?’ Why

Many people are not aware of the ‘alternatives’ when facing foreclosure. The state and the federal agencies do not provide any literature to default borrowers as a ‘preventative’ measure. Knowing your options, as detailed on a General Public Disclosure document, can make all the difference in establishing a deal that’s in the homeowners’ best interest.

Source:   Marian Anthony (RISMedia): Real estate finance expert, author and speaker, Marian Anthony is the President of Anthony Realty Group (ARG)–a San Diego-based consumer advocacy agency that helps educate real estate professionals throughout Southern California to better assist home buyers and investors. Anthony is also founder of the California Default Mortgage Hotline—a non-profit public interest group availing financially-stressed homeowners in mortgage default with validated information and industry resources.

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Adjustable-Rate Mortgages: Do they make sense now?

adjustable rate mortgage

Adjustable-rate mortgages (ARMs) get bad press. The poster child for irresponsible borrowing, they’re the mortgage industry’s bad boys. But ARMs can be excellent loans for thrifty borrowers.

Here is a quick recap on how ARMs work:

An ARM begins with a low introductory rate that remains fixed for a specified period. Upon expiration, the interest rate periodically adjusts based on an underlying index, which goes up or down. This contrasts sharply with a fixed-rate mortgage (FRM), where the monthly payment remains consistent.

The chief advantage of an ARM is that it allows you to save money in the early years. However, it can become dangerous because historically, declining rates don’t last more than approximately five years. Therefore, payments on a 15- or 30-year ARM will generally increase over time. A plan to refinance when the introductory period ends is a terrific idea—if you can pull it off. But if you can’t, and are unable to make increased monthly payments, you may lose your home.

This unpredictability makes an ARM inherently riskier than its fixed-rate counterpart. With mortgage rates at 7.5% or less for 185 of the past 210 years, it’s a reasonable risk—except if you’re living through a period like the late 1970s and early 1980s, when interest rates hit 17%.

Is an ARM right for you today?

An ARM may be right if:

1. You plan to refinance or sell within five to seven years.

Since an ARM’s introductory interest rate is lower than its fixed-rate counterpart, you’ll save money during the loan’s first few years. The most common ARMs are 3/1, 5/1, and 7/1. The first digit indicates the number of years the introductory rate remains fixed; the second, the frequency of rate adjustments. (A 3/1 ARM has a fixed rate for three years, then adjusts annually.) If you pay off your loan, refinance, or sell before the introductory rate expires, an ARM makes sense.

Example: You borrow $300,000 to buy an investment property that you’ll fix up and resell within two years. Your options are either a 3/1 ARM that opens at 3.5% or an FRM that’s locked in at 5.5%. The ARM’s monthly payment during the first three years: $1,347.13; the FRM’s payment: $1,703.37. During the ARM’s introductory period, you’d save $356.24 monthly (about $4,275 annually). During the first two years, the aggregate savings would be about $8,550—a sizeable sum.

2. You want to pay as little as possible.

Money saved on a mortgage payment is money in your pocket. If you don’t want to pay any more than is absolutely necessary in the early years, you’re a good ARM candidate. You’ll generally save money over a 30-year fixed loan for the first seven or eight years.

3. You want to aggressively pay down your mortgage.

According to Dave Donhoff, a financial advisor at Leverage Planners in Kirkland, Wash., “An immediate ARM is good for a borrower who wants to get rid of his mortgage as quickly as possible. It’s risky because rates can change monthly, but since you’d be paying significantly less than with a fixed-rate loan, you could accumulate home equity faster by aggressively paying down your mortgage.”

Example: You have a 30-year FRM of $100,000 at 6%; the monthly payment is $500. An immediate ARM might be around 3%, or $200 per month, which is a 60% savings over the FRM. If you paid down your principal with that savings, you’d have $3,000 a year of accelerated equity accumulation.
Risk factors

Of course, it can be harder in practice. Suppose you plan to sell the property once the introductory rate expires. Your home’s value could plummet, and selling wouldn’t pay off your loan balance. Or the real estate market could stagnate, making it difficult to unload your home.

If you plan to refinance, a tight lending environment could make that challenging. If your home value drops, you may not have enough equity to refinance. Credit standards could change, making you a less-than-desirable borrower. Or rising interest rates could disqualify you for a new loan based on your monthly income and expenses.

Worst-case scenarios:

These risks could derail your plans to pay off the mortgage, so evaluate what might happen after the ARM resets. Check its periodic cap; this is the maximum amount your mortgage rate can increase at each adjustment. If this cap is 2%, your 3/1 3.5% ARM could rise to 5.5% in year four, 7.5% in year five, and so on. In year five, your payment could rise to $2,023.57, which is $320.02 more than with a Fixed Rate Mortgage (FRM). Assuming a rising ARM, you’d give back all your savings from earlier years in year seven.

These numbers could substantially differ depending on the periodic and lifetime caps associated with your specific ARM. A less aggressive mortgage with a lower periodic cap could take significantly longer to sour.

If your risk tolerance and flexibility levels are low, an FRM is a better loan for you. Ultimately, even though there can be cost savings with an ARM, you should choose the mortgage that gives you peace of mind in any market.

Find out what you qualify for and which programs are available for you – There is an online form you can easily submit to find out what you qualify for or just call them directly.

However, if you feel that you need some help on your credit report – go to and find out how to fix or improve your credit score within 75 days.

Source: Barbara Eisner Bayer ( Bayer has written about mortgages and personal finance for the past 15 years for the Motley Fool, the Daily Plan-It, and, and is the former Managing Editor of and She enjoys the flexibility of adjustable-rate products, but is temperamentally a fixed-rate kinda gal.

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Second Credit Checks for Home Buyers: Effective Today (June 1, 2010)

credit report clipboard

Starting June 1, Fannie Mae has a new rule going into effect which requires the lender to check for additional lines of credit, such as a new credit card or a car lease, that a borrower may have obtained that have not been reflected on the credit report over the course of the loan process. With stricter regulations mandating a further credit probe before borrowers close their mortgage, real estate experts are advising prospective home shoppers to keep their financial situation static until the deal is finalized.

In light of the new regulation, we talked to a pool of mortgage brokers, who shared tips on dodging mortgage closing debacles and streamlining the process.

Tip No. 1: Get the house before the car

Across the board, mortgage brokers say that opening new lines of credit is the easiest thing to trigger the lender’s attention, especially with the news of Fannie Mae’s mandate. For example, this means opening up a store card at Lowe’s to get a head start on buying some new appliances or paint or leasing a car to have something shiny to park in your new garage.

New credit obligations, such as as credit cards, increases a borrower’s debt-to-income ratio (the amount of debt including mortgages, car loans, student loans, credit cards versus overall income). Fannie Mae sets the maximum for the debt-to-income threshold at 45 percent of a borrower’s gross monthly income. Breaking this cap –even after pre-approval–would result in a defunct loan.

Tip No. 2: Don’t switch professions (or tax brackets)

Brokers say its not earth-shattering to change jobs in the same field, especially if you are making more money at the new place of employment, but it’s complicated when a professional is moving job classifications, for instance, from employed to self-employed, or from a salaried-position to a commission job. “Moving from an employee to a contract basis is a dagger,” says Stern, as two years of federal tax returns need to be included with a loan application. “[In this case], it could take three years to get approved for a mortgage.”

As another precaution given the nation’s high unemployment rate, Stewart says it’s becoming routine for lenders to get a verbal confirmation of a borrower’s employment status on the day of the closing.

Tip No. 3: Try not to move around big sums of money — even deposits

One broker says keeping your financial situation unchanged is not only refraining from withdrawing large sums of money, but also avoiding making big deposits of money in any of your bank accounts from pre-approval to day of closing. To qualify for a mortgage, one of the requirements is proof of all assets, including checking, savings, stocks or bonds, and if this is checked at any future point, the borrower may need to provide records of the fund’s origins.

“That’s what tight lending is these days — providing documentation,” says Jay Sondhi, a mortgage consultant in San Francisco. “What they are concerned about is that a large deposit may be borrowed money.”

Though more money in your bank account is not going to sabotage your qualifications for a loan, complying with documentation requirements and time delays may make a closing a mortgage a bigger hassle.

Tip No. 4: Monitor the balance of your credit cards

Though the credit score formula is deemed an enigma by many, the balance that’s riding on your credit cards plays
a big part in determining your credit score
. Higher scores result in borrowers being able to secure better interest rates.

With tight lending policies and stricter, more spelled-out regulations in the post-boom era, getting a mortgage has become increasingly confusing for the consumer. But keeping your finances transparent and steady will help simplify the process.

Source: Megan Mollman (AOL Real Estate)

Need to fix your Credit Score? More information here…

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10 Important Tips After a Bankruptcy

rebuild your credit after bankruptcy

One common problem people emerging from bankruptcy often face is the negative, long-term impact it has on their ability to be approved for new credit at a reasonable cost. Many creditors will not lend to you for one to two years. When you finally begin to qualify again, you will typically be categorized as “extra high risk,” which often is accompanied by lower credit limits and very high interest rates.

The good news is that nothing in credit is forever. The effect of a bankruptcy on your credit score can start to diminish the day your case is closed.

10 Important Tips to Rebuild Your Credit After a Bankruptcy:

1. Plan your credit recovery – take it slow and easy – do it right – don’t exceed what you can afford.

2. If your credit report contains inaccuracies about debt that was discharged through your bankruptcy, contact the creditor or the credit bureaus to request a correction.

3. If your problem was over-spending, create a written budget and STICK to it.

4. To re-establish a strong credit profile, you need a good history of payments from credit cards and installment debt, such as autos, student loans or a home loan.

5. The rebuilding process requires you to use credit responsibly. Use only a small portion (30% or less) of your available credit line and ensure you make a payment every month.

6. If your problem was related to medical bills, seek out a solution for insurance.

7. Learn more about how credit works through the Internet, counseling services or a seminar. Do it right and know what you’re doing.

8. If you didn’t have enough savings to survive a setback, get serious about savings for an emergency fund. In the current economy, you need at least 12-16 months.

9. When you start to re-establish your credit, consider a “secure” credit card. Such cards are usually backed by your savings account or money you place in escrow to cover 100% of your credit line in case you don’t make your payment.

10. You may be able to apply for a home loan in as little as two years after the discharge of your bankruptcy, however, except to pay higher fees and interest rates.

Source: Jeff Mandel and Marlin Brandt (RISMedia)
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Repair Your Credit in 10 Steps

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Many people have been asking if they can fix their credit score themselves.   There are steps, which are outlined below, that people can follow to repair their credit.  However, we have found, that it is not the actual steps that are difficult, but the time and running around it takes to see any results.  Most people do not have the time, patience and stamina to do what it takes.

If you would like to take on the challenge yourself, follow the steps below, take good notes, be organized and stay on top of it ’till the end.  If you would like more information on a credit repair service that is legal and customer oriented, feel free to visit Backyard Credit Repair for a Free Credit Report Guide.

Step 1

Get copies of your credit reports. Once you have your credit reports in your hand, review them carefully for inaccurate information. After reviewing them and you find errors, use a sample dispute letter that you can find on the internet to dispute the errors you found. Send this letter by way of certified mail and return receipt. The credit bureaus have 30 days to investigate the inaccurate information and get back with you. If they cannot complete the investigation within 30 days, then according to THE FAIR CREDIT REPORTING ACT, they must delete the item.

Step 2

If 30 days has past and you still have not heard from the credit bureaus, then send out a follow-up letter restating the inaccurate information in your credit reports.

Step 3

Once you get your credit reports back after the 30 days and you notice that the errors have not been corrected, then send out a more threatening letter using the language from the FAIR CREDIT REPORTING ACT,

Step 4

After receiving your credit reports for a fourth time, and the credit bureaus still have not fixed the errors, then inform the credit bureaus that if they don’t fix the problems in your report, you will file a complaint with the Federal Trade Commission.

Step 5

Still have not seen any changes in your credit reports, then file a complaint with the Federal Trade Commission and attach a copy of your complaint to your 5th dispute letter. In the 5th letter you will inform the credit bureaus that you will file a complaint with the office of the Attorney General.

Step 6

Still no changes to your credit reports, then file a complaint with the office of the Attorney General and attach the complaint to your 6th dispute letter. This time in this letter you will inform the credit bureaus that you will file a complaint with their state Senators office. Attach your complaint to the Attorney Generals office with your 6th letter.

Step 7

Still no changes to your credit reports, then write the credit bureaus and inform them that if the errors on your credit reports is not fixed within 30 days, then you have no other choice but to seek legal advice.

Step 8

Still no changes to your credit reports, then send a letter to the credit bureaus threatening to sue for failing to properly investigate the errors on your credit report according to the THE FAIR CREDIT REPORTING ACT.

Step 9

Still no changes to your credit reports, then sue the credit bureaus in small claims court. Seek the advice of an attorney or contact the courts for the proper procedures on filing. Once you have filed your complaint, send a copy of your complaint along with a letter informing the credit bureaus that you are suing them and that they have 15 days to respond and correct the problem on your credit report.

Step 10

Still no changes to your credit reports, and the credit bureaus has not responded to your letters, then proceed with the suit in small claims court.

Source: Marklove (ehow)

Credit Repair Solutions for everybody.  See how we can help.

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Help! Fix my credit! (Video)

Backyard Wealth Video on credit repair

Click the screen above to watch the video.

One of the most common requests we’ve been receiving recently is about fixing or repairing credit scores.

We can help.  Go to for more information.

Check out more helpful videos.  Visit the Backyard Wealth Channel.

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