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Friday, January 10 2014

It can take years for first-time buyers to save up for their first home’s down payment, but even after that hurdle has been cleared, it can take even more time to secure a mortgage -- if they have neglected the other part of the equation. Their credit rating.

Before first-time buyers in Evansville will be able to move forward with that initial home purchase, they need to ensure that their credit score does not raise the kind of questions that sometimes derails an otherwise well-qualified home loan applicant. This has always been true, but may become even more likely as lending limitations grow increasingly strict.  

But it’s the occasional recording error or misstatement that is most easily preventable. Ironically, those often affect perfectly well-qualified buyers—precisely because they have no reason to suspect that a problem could crop up.

The upshot: first time buyers should start reviewing their credit history one year to six months before they intend to buy a home. Since the credit agencies provide upon request free copies of every individual’s report once each year, the only hassle is having to check the details line-by-line (a single reporting error can have a big impact on an overall score). And since it’s not unusual to take 90 days or more to cure a disputed entry, the earlier a first-time buyer begins the process, the better. Individuals can file a dispute online with the credit bureaus, or can hire a credit repair company to assist with disputes. In all cases, claims should be documented and correct information provided immediately.   

Once a first-time buyer is certain that his or her reports are accurate, is it time to relax? Hardly. It’s important to continue to monitor those scores to ensure against accidental surprises. Especially, after wholesale credit card thefts sowed confusion and disruption throughout the system, it’s probably wise to assume nothing. Several online services offer credit monitoring (and it’s possible that your bank might provide free monitoring).

From first-time buyers to seasoned investors, I’m here to help my clients every step of the way. Call me today! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Posted by: Rolando Trentini AT 08:00 am   |  Permalink   |  0 Comments  |  Email
Monday, September 12 2011

by Tom Quinn

Maureen from San Diego wrote in asking for help regarding a challenging situation—a family member needs a favor, but one that can potentially hurt her credit score.

Her brother lost his job about a year ago and has subsequently fallen behind on his mortgage payments. On top of that, the value of the property has dropped by about 35% since the home was purchased, and is now worth far less than what is currently owed. Despite attempts to find a work-around, the situation has reached a point where foreclosure is imminent.

Maureen’s brother has started the process of searching for new housing, but is concerned about his chances of being approved for a rental as he was surprised to learn that many landlords pull a credit bureau report and score as part of the applicant review process. His credit score is already very low, as his missed payments on his mortgage and other credit accounts over the past year are already reflected in his credit report.

[Article: How Credit Inquiries Affect Your Credit Score]

Maureen’s brother has asked if she would be the primary on the rental application given she has good credit (credit scores above 720) and has a better chance of being approved—while he would actually make the rental payments. Maureen wants to help, but has concerns doing this could have a negative impact on her credit rating.

Unfortunately, this situation is becoming more commonplace as the number of people in duress with their mortgage continues to remain at record levels. As family members, it’s natural to want to help and provide the best support you can, and yet it is equally important to think carefully about potential short- and long-term ramifications these actions could have on your own financial profile.

The impact on Maureen’s credit report/score if she were to sign a rental lease would likely be minimal. There may be a small number of points lost due to the credit inquiry that is posted on her file when the landlord pulls her credit report. Right now, it is relatively uncommon that the payment history (positive or negative) for rent to be reported to the three national credit reporting agencies. However, the rental entity could opt to turn over a severely delinquent renter to a collection agency, and that could end up being reported and would be considered negative by the credit score.

[Featured Product: Monitor your Credit Reports and Scores]

If your name is on the lease, it would be posted to your credit bureau report. In addition, there are other smaller credit reporting agencies that may be capturing such information and a lender may access it when reviewing your application for credit.

It is important to note that the person signing the rental contract is legally liable for making the payments, regardless of any informal agreement one may have with a family member regarding who will actually be paying the rent (this holds true for roommates, as well). That could have ramifications if you’re seeking new credit in the future. For example, completing an application for credit usually requires you disclose all of your monthly debt obligations and your signature on that application indicates you have truthfully disclosed that information. One could argue that disclosure of the monthly rental amount should be included if you are legally responsible for the lease.

The mixing of family and financial matters can be a recipe for angst and frustration. When surfaced, it is a best practice to carefully review and understand potential ramifications before making any decisions that could have unintended consequences.

[Resource: Get your free Credit Report Card]

Source: http://www.credit.com/blog/2011/08/credit-score-dont-signing-an-apartment-lease-on-behalf-of-someone-else/

Posted by: Rolando Trentini AT 08:00 am   |  Permalink   |  Email
Monday, July 18 2011

Beginning on July 21, consumers who are rejected by lenders for new lines of credit, such as a credit card or home loan, based on their credit score will be allowed to find out why, according to a report from CBS News. When consumers are denied, the financial institution will have to provide them with a free copy of the credit score it used to determine their ineligibility. Previously these reports would have cost consumers a small amount of money to view.

[Consumer Resource: Tips to Improve and Rebuild Your Credit]

This rule is also being extended to cover all consumers who are granted the line of credit but given interest rates that are less than ideal, the report said. In addition, the lender will have to explain what portion of the consumers’ credit history was weighing down their rating.

The large majority of a consumer’s credit score is made up of the payment history and the amount of available credit being used across all accounts. Altogether, these two factors alone make up 65 percent of a total rating. As a consequence, it is of the utmost importance to keep credit card spending under control and make regular on-time payments.

[Free Tool: Not sure where you stand credit wise? Get your Free Credit Report Card to find out.]

Source: http://www.credit.com/blog/2011/07/federal-credit-score-law-will-take-effect-next-week/

Posted by: Rolando Trentini AT 08:00 am   |  Permalink   |  0 Comments  |  Email
Saturday, June 05 2010

Many Americans are dealing with the stress of being in debt and their credit score is suffering as a result.

There are a number of steps a consumer can take to improve their score on their own, says a report from KTAR radio in Phoenix. While some companies promise to fix consumer's debt for a price, more often than not they aren't capable of doing so, and if they are, it can take years and ruin the consumer's credit score in the process.

Any credit damage can be repaired by the consumer or with help from free services, the report said. All a consumer needs to do is start following three steps.

The first step, the report said, is to start paying bills on time, every time, making sure to pay in full so that there is no outstanding debt of any kind. The second step is to pay down any remaining debt and to stop charging until that debt is paid off. And when paying off debt, consumers must make sure to pay off the debt with the highest interest first because that's costing consumers the most money.

A recent report in the Pittsburgh Post-Gazette said that payment history makes up the biggest part of what goes into a credit score, a full 35 percent. Therefore, it is important that payments be made on time every time. Missing just one payment for more than 30 days can knock 50 to 100 points off a credit score.

Source: http://www.credit.com/news/credit-debt/2010-06-02/the-dos-and-don-ts-for-repairing-a-credit-score.html

Posted by: Rolando Trentini AT 08:00 am   |  Permalink   |  0 Comments  |  Email
Saturday, April 24 2010
Fair Isaac, which developed FICO scores, used a comparison between two people to explain how mortgage delinquencies affect credit scores.

Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.

The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.

After a mortgage delinquency, the two scores would look like this:

After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.

After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.

After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.

After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.

Source: CNN, Les Christie (04/22/2010) http://www.realtor.org/rmodaily.nsf/pages/News2010042204?OpenDocument
Posted by: Rolando Trentini AT 08:00 am   |  Permalink   |  0 Comments  |  Email
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The Trentini Team
F.C. Tucker EMGE REALTORS®
7820 Eagle Crest Bvd., Suite 200
Evansville, IN 47715
Office: (812) 479-0801
Cell: (812) 499-9234
Email: Rolando@RolandoTrentini.com


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