You probably know that the better your credit score is, the bigger and better the loan you will qualify for. But do you know what goes into the credit scoring model and if your credit has suffered in the past, how to get it back in shape so you get the best loan possible?
We all know bad things happen to good people, in fact most everybody has had there credit damaged at one point or another for various reasons. The biggest reason is the big "D," followed by death or injury of a wage earner and finally unexpected medical bills. All of these are unfortunate things and cannot be avoided (short of not getting married or working!), it's how you choose to recover from your bad credit that will affect how fast you qualify for a home loan.
1. The first thing to remember is your credit score is a constantly changing equation that produces a number to gauge risk. Basically, the higher you score in the equation, the better your chances of qualifying for a loan and the less risk you pose to your lender. This is good for you because you can make instant changes to your financial picture and instantly change your credit score. Empowering right! It does not take forever to repair credit, depending on how fast you move.
2. The biggest contributor to your credit score is your payment history, particularly over the past two years. The longer you have a tradeline reporting with no lates, the better your score will be. NEVER CLOSE ANY CREDIT ACCOUNTS BECAUSE YOU DON'T USE THEM OR THEY HAVE A ZERO BALANCE. Closing these accounts will hurt your score because you are eliminating positive payment history from the report. If money is tight try and make the minimum payments on your cards, maintain that history, you can pay the balance down later when your finances get better.
3. The second most important part of your credit score is the relationship between what debts you owe and your total credit limit. The closer you are to the limit on a credit card or installment loan, the more damaging it is to your credit. For example, it is a much better idea to keep several low balances on several credit cards then it is to keep one large balance on one credit card and nothing on the others. You are most rewarded for keeping a balance as close to 30% of your limit as possible if you are carrying any debt. If you have a low credit score, try moving some debt around to your other cards and reducing each of your principal balances. You will begin to see instant changes in your score and most credit card providers will even do a 0% balance transfer for you for a set period of time!
4. Many people are not aware that having different types of credit on your report has an impact on your credit score. Having several types of credit such as a credit card, installment loan and mortgage on your report will improve your score because it shows you can be responsible with all types of credit. If you are attempting to rebuild your credit, opening a new tradeline may be a good way to increase your score quickly.
5. Decide where you want to apply for credit and stick with it. Please do not go shopping around for credit if you are denied in the first place. If you are hearing you do not qualify from more than one company, it is you, not them. Find a certified credit counselor or credit expert and not a service that promises credit repair by establishing a monthly payment plan, and work with them. Every time a lender pulls your credit is has an impact on your credit score. You are allowed to shop within the same industry over a 30 day period without being penalized. If you are denied do not keep trying and trying, you will damage your score more. Follow the tips outlined in this blog and work diligently, credit repair is possible for anybody!
If you have further questions or comments on repairing your credit please contact me and I will assist you or refer you to an expert in the field.
Friday, October 5, 2007
Tuesday, October 2, 2007
Six things every veteran should know before purchasing their home!
When it comes to purchasing a home there are several things every veteran must know about their loan and their lender to make sure they get the best home loan possible.
Eligibility, funding fee's and APR's can be confusing. This blog is intended to help demystify the purchase process for Veterans.
1. Federal VA loans do not require a down-payment. A Veteran that meets all eligibility requirements for a VA loan is not required to make a down-payment when buying a home. Furthermore, your closing costs can come in the form of a seller concession. This is when the seller agrees to pay all or some of your closing costs as a contingency to the offer, leaving the Veteran with no out of pocket expenses at closing.
2. Veterans loans are not underwritten based on Credit alone. It is a common misconception that you can not get a home loan if you have a past bankruptcy on your record or late payments on your record. Not True. The Veterans credit will be considered but not scrutinized as heavily as some standard conventional programs. Many Veterans have extenuating circumstances that have caused checkered credit histories for them, this will not prevent you from obtaining a loan. Your loan is based primarily on your debt to income ratios and your eligibility.
3. The VA does not discriminate on what property types are eligible. Current VA loan limits for most states are set at $417,000 and there is talk of raising the loan limits. There is much stigma surrounding both FHA and VA loans regarding properties eligible for finance. This is an old stigma and a hurtful one. The VA will only discriminate on make sense issues, like a leaky roof, cracked foundation, noxious odors or issues that affect economic life or the livability of the house. If you can afford the house, most properties will qualify.
4. Veterans loans qualify for the best interest rates in the market! Perhaps the best feature of VA loans are the fantastic interest rates Vets qualify for. Because the loans are based on more than just conventional guidelines, Veterans get the same if not better interest rates than standard conventional borrowers do from banks. Even better is you qualify for this rate at 100% loan-to-value, whereas other banks will limit you to 80%.
5. There is no PMI attached to Veterans Loans. Unlike standard conventional loans that require Mortgage Insurance on all loans over 80% loan-to-value, VA loans have no PMI. This means the veteran saves a ton of money monthly when financing 100% of their homes value. Instead of PMI the VA charges a funding fee which varies based on the amount borrowed and how many times the veteran has used their eligibility. This funding fee allows Veterans to secure these fantastic interest rates and loan amounts.
6. Eligible Veterans can get their certificate of eligibility through a trusted local VA lender and apply for financing free. Va Loans are a fantastic resource for Veterans. Veterans should contact a local lender or their state VA and find out if they qualify for a Veterans loan. Some States even have local Veterans programs that have special rates and lowered funding fees for Veterans. If you are a veteran contact your lender or Veterans Administration for more info on Veterans loans.
To read and learn more please visit my active rain profile....
Eligibility, funding fee's and APR's can be confusing. This blog is intended to help demystify the purchase process for Veterans.
1. Federal VA loans do not require a down-payment. A Veteran that meets all eligibility requirements for a VA loan is not required to make a down-payment when buying a home. Furthermore, your closing costs can come in the form of a seller concession. This is when the seller agrees to pay all or some of your closing costs as a contingency to the offer, leaving the Veteran with no out of pocket expenses at closing.
2. Veterans loans are not underwritten based on Credit alone. It is a common misconception that you can not get a home loan if you have a past bankruptcy on your record or late payments on your record. Not True. The Veterans credit will be considered but not scrutinized as heavily as some standard conventional programs. Many Veterans have extenuating circumstances that have caused checkered credit histories for them, this will not prevent you from obtaining a loan. Your loan is based primarily on your debt to income ratios and your eligibility.
3. The VA does not discriminate on what property types are eligible. Current VA loan limits for most states are set at $417,000 and there is talk of raising the loan limits. There is much stigma surrounding both FHA and VA loans regarding properties eligible for finance. This is an old stigma and a hurtful one. The VA will only discriminate on make sense issues, like a leaky roof, cracked foundation, noxious odors or issues that affect economic life or the livability of the house. If you can afford the house, most properties will qualify.
4. Veterans loans qualify for the best interest rates in the market! Perhaps the best feature of VA loans are the fantastic interest rates Vets qualify for. Because the loans are based on more than just conventional guidelines, Veterans get the same if not better interest rates than standard conventional borrowers do from banks. Even better is you qualify for this rate at 100% loan-to-value, whereas other banks will limit you to 80%.
5. There is no PMI attached to Veterans Loans. Unlike standard conventional loans that require Mortgage Insurance on all loans over 80% loan-to-value, VA loans have no PMI. This means the veteran saves a ton of money monthly when financing 100% of their homes value. Instead of PMI the VA charges a funding fee which varies based on the amount borrowed and how many times the veteran has used their eligibility. This funding fee allows Veterans to secure these fantastic interest rates and loan amounts.
6. Eligible Veterans can get their certificate of eligibility through a trusted local VA lender and apply for financing free. Va Loans are a fantastic resource for Veterans. Veterans should contact a local lender or their state VA and find out if they qualify for a Veterans loan. Some States even have local Veterans programs that have special rates and lowered funding fees for Veterans. If you are a veteran contact your lender or Veterans Administration for more info on Veterans loans.
To read and learn more please visit my active rain profile....
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