What are Credit Brackets?

This is an advanced topic, not one I see often discussed.

The FICO scoring system has multiple credit score brackets. Each bracket is scored on a “grading curve,” meaning all the credit profiles in that same bracket are scored against each other.

Image by Experian

Think of it like classrooms. The first graders are scored together; the second graders are scored together, and so on. The student who earns an “A” in first grade would not earn an “A” in third grade for the same work. Third graders are scored more strictly than first graders.

If you have a judgment on your credit report, you are in a bracket with other people who also have judgments. If you have zero public records and zero late payments, you are scored against other people who also have zero public records and late payments. Thus, the people with perfect credit are scored against one another.

This explains why a person with perfect credit who gets one 30-day late payment on a credit card can lose 80 points off their score; whereas a person with multiple scattered late payments throughout the years might lose only 30 points with a new 30-day late payment. They are in different brackets for scoring.

“Why Did My Score Go Down When My Judgment Came Off?”

Let’s look at two scenarios:

#1 Person has multiple late payments and a judgment

#2 Person has zero late payments but one judgment

Scenario #1: If this person removes the judgment off their credit report, their score will improve — possibly significantly. This is as you would expect.

Scenario 2: If this person removes the only derogatory item on their report, the judgment, now they are no longer in the bracket with others having a judgment (and probably multiple other derogatory accounts). They get to “graduate” up to the bracket with people who have no bad credit. Now, in this “higher grade bracket,” their score could actually go down, because all the other people with pristine credit might have even better credit than this person for the following reasons:

  • They might have lower balance-to-limit ratios. (A major factor)
  • They might pay their balances in full each month rather than carry balances.
  • They might have a better mix of credit.

Don’t Despair!

If you are like scenario #2 and saw a drop in your score when your derogatory item was removed, don’t despair. Now by paying attention to the three bullet points above, you can raise your score even higher. But more importantly, it is also possible that your true mortgage score (as compared to the consumer scores you get from your credit card company, and the phony scores provided by those free score sites) may have gone up, not down. Don’t micro-manage your score while you are doing credit repair; that’s like jumping on the scale every hour while you’re on a weight loss program. You want to look at the big picture.

For more information on how to achieve top tier credit in the shortest possible time, take a look at Build and Protect Your Credit here.

Handling Calls From Collectors: Part 2 Amendment

I was happy to hear from two respected credit repair specialists regarding my post on handling calls from collectors. I am amending my previous blog post to say this:

  1. If you can get a collection removed from your credit report, you definitely want to pursue that. When a collection is deleted, it benefits your credit profile and improves your credit score.

As Mr. Tony Peters wrote:

“Why aren’t people disputing these debts, even if valid, right off the report since the collection agency isn’t the data furnisher? They also list amounts that they didn’t pay so not only do we not owe the false furnisher, but we don’t owe them said amount.”

With so much erroneous information, including missing information, on credit reports, you have the right to challenge anything that is not correct and validated. Your credit report is supposed to be 100% accurate; not 99% accurate. However, even if a collection is removed from your report, the collector can still pursue calling you for money. Therefore, be professionally polite and vigilant about protecting your privacy.

2. Don’t say anything that is not in your own benefit. As Mr. K.T. Embry pointed out:

“The suggestions to admit to owing the debt puts the consumer in a very bad position…The Collector will be recording the call also and when the Consumer has admitted to owing the debt that is all the ammunition that the collector needs in order to go to court and win… The Collector no longer has to prove anything because the Consumer has admitted to owing the debt…”

Very true! They don’t care if you are financially strapped; they assume that is the case or you wouldn’t have a collection account. They care about one thing: collecting money. Even if you tell them you don’t have money, will they believe you? How do they know you aren’t lying? How do they know you don’t have a stash of hundred dollar bills in your home safe?

I respect credit professionals who are actively working in credit repair. I am a licensed mortgage broker and do not do credit repair. I come across all kinds of credit situations when people apply for a home loan, as you might imagine. Please feel free to weight in, post comments, and correct anything I might say that is in error. Thank you.

Handling Calls From Collectors

True story, happened this week.

A woman applies for a home loan to buy a house. Her credit isn’t perfect, which is all right. Collections that add up to less than $2,000 can be ignored by the mortgage lender. Medical collections can be ignored. If the credit score and income qualifies, all is well.

The loan officer calls the woman back to discuss her loan application. “Hello, Mrs. (Name)?”

“Hello, hello, hello?” the woman replies, then she launches into the most foul language imaginable and hangs up. Apparently, she assumed the nice loan officer was one of her collectors calling for money.

Guess who’s not getting a Letter of Approval for a Home loan?

Even if you aren’t applying for a mortgage and you are correct in assuming the caller is a collector, you must never, ever use rude or foul language. Doing so only shoots yourself in the pocketbook.

How to Handle Collector Calls If You Don’t Owe Money

If the collector is wrong or if the account is past the Statute of Limitations for collecting money in your state, then say this:

“I am going to record this phone call. I want it on record that the reason I don’t owe money on this account is because…” Explain your reason and end the conversation by saying, “Please correct the account with the credit bureaus to show this is paid-as-agreed. I will be sending a letter to the bureaus as well.”

If you need to look up the Statute of Limitations for your state, see here.

How to Handle Collector Calls If You DO Owe Money

“Thank you for calling me to discuss this account.” (That will put them off guard! No one ever thanks them.) “My credit is important to me, but I don’t have funds to pay the entire balance. Since your company purchased the debt for pennies on the dollar, let’s discuss a settlement arrangement that would work.”

Be prepared to tell them how much you can pay.
Do NOT tell them what your income is!
Do NOT tell them where you work — or even say you are employed!
Do NOT tell them where you bank!
Do NOT agree to automatic payments or auto-debit!

If they ask any of those questions, reply with, “I am not divulging that information. Let’s discuss the settlement.”

You must never give them information they could use to garnish your wages, recalculate how much they think you should be able to afford, or get their long fingers into your bank account!!!

Keep the conversation professional. Record it if possible. Get your settlement agreed upon, and then get it in writing.

You must get your settlement agreement in writing. You cannot trust a verbal agreement.

Don’t Tell Them to Cease and Desist Contacting You

If you truly owe money, don’t tell them to stop contacting you. Why? Because if you cut off all communication, their next move might be to file lawsuit.

Better to work out an agreement than to get slapped with a lawsuit!

What If You Can’t Pay?

If you can’t afford to pay even $5 per month, then tell them why. “I’m sorry, but at this time, I am unemployed and have no money to live on. I am literally going to the food bank to feed my family. As soon as I am back to work, I will set up a pay plan.”

Always be professional and polite. Maintain your personal dignity. Be smart. Swearing and foul language only reflects poorly on yourself and sets you up for the collector to take negative action against you.

Urgent: Giving Tuesday

With great joy, I share with you my participation in Giving Tuesday. If you are looking for a worthy charity that is not already raking in millions of dollars, where there are no administrative fees taken out of your gift, then please consider joining me. I’ll explain.

Young surviving widows of horrific wars, murders, and unknown diseases are some of the most impoverished women on Earth. And because job opportunities in Rwanda are nearly non-existent, these women support their children by picking up after construction sites — a hard-labor job with long hours and too little pay to cover both food and school.

In Rwanda, there is no free school. So if your income cannot cover both food and school, the children forego education, don’t learn to read or write, and the cycle of extreme poverty continues.

In addition, many of these surviving women are taking care of the orphaned children of their murdered brothers and sisters, in addition to their own. In Rwanda, there is no foster care program, welfare program, food stamps, or any other way to keep children from becoming street beggars, if their auntie doesn’t take them in.

Then along came Handspun Hope!

Handspun Hope is a registered 501(c) nonprofit organization. They purchased land, sheep, and rabbits. They employed these women and taught them to care for the animals, sheer sheep, clean and dye the wool, and spin the wool into yarn.

They sell yarn as well as garments they handknit from the yarn.

There are other products they produce as well: embroidered tea towels, cotton skirts, buttons made of scraps of horns, leather items, and more.

But sales are not enough, especially during this worldwide pandemic, so they need donations as well to keep these women employed and their children in school. Today only, Facebook is matching donations made here. People can also donate on their website here.

Personally, I have purchased the merino yarn, and the sweater I knit is as soft as cotton. I think it may be the highest quality wool I’ve ever owned. I also donated funds from my book sales, because…

… what could be more important than putting surviving women to work and sending children to school?

Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world. ~ James 1:27, New Testament

www.HandspunHope.org to read the stories of these women, see projects, and much more

New Loan Limits For 2021!

Based on new higher values of homes across America, conventional loans have been increased for 2021. This means that you can get a larger loan without going into the jumbo loan category.

Jumbo loans require a larger down payment and carry a higher interest rate, so this is great news for home buyers!


New limit is $548,250 for a regular one-unit home.

In areas where the median price of homes is higher than average — such as some counties in California, Western Washington, New York as well as other states — the new loan is higher.

The High Balance loan limit is $822,375.

Duplexes, tri-plexes, and four-unit properties also have higher limits.

For a chart showing loan limits in all U.S. counties, click here.

For a really cool map where you can scroll over all the counties in the U.S., click here.


If you want to take advantage of the higher loan limits now instead of waiting for 2021, mortgage brokers have access to this now.

Three Reasons to Say No to Experian Boost

You might have seen ads by Experian Boost saying you can instantly increase your credit score by signing up for their new credit program. But before you do, check out these three reasons why it’s better for most people to say No, thanks!

Three Good Reasons to Avoid Experian Boost

  1. It will have no effect on your mortgage credit score. Mortgage lenders do not use the Experian Boost credit score program.
  2. Experian Boost does NOT help your scores with Experian or TransUnion. Most creditors pull at least two credit reports and go by the lower score, or they might not use Experian at all.
  3. The success rate is only 5% to 15%, meaning 95% to 85% of people who use Experian Boost will not see enough improvement to move them into a higher credit category.


The three reasons above tell you why Experian Boost is a waste of your time, but worse than that is the privacy you are giving up. I’ll explain.

Experian didn’t create Boost out of the kindness of their hearts to help you out. They created it in order to gather more of your private information. When you do the Boost program, you give them access to your personal bank accounts, cell phone account, electric power account. They can now see all your payment activity, debit card activity, everyone you do financial business with, how fast you pay, and more.

951 5-star reviews on Amazon

Talk about handing over your passcodes and account numbers! That’s what you are doing! And for what benefit? You get a so-called new credit score that doesn’t even mean anything to mortgage lenders or a lot of other creditors.

Please pass on this critical information to other good people so they don’t get “taken in” by those misleading ads. Thank you.

Using a $0-Down VA Loan to Purchase a Home

If you are a member of the U.S. Military, you may qualify for a $0-down home loan. Details are below, but first, I want to thank and honor all who served our great country.

Highest respect and gratitude to you, our United States Military Veterans and current members of the United States Military!

The Basics for Qualifying for a VA Home Loan


Perfect credit not required. The most recent 12 months are the most important. If you had difficulty in the past, but are back on track paying your creditors on time, now, that is what underwriting wants to see. Old collections and charge-offs might be ignored, depending on the balance and age.

The mortgage lenders pulls a tri-merge credit report with all three credit scores. The lowest score is thrown out. The middle score is used for qualifying. 640 score preferred, but some lenders go lower.


Need a two-year history of employment. Use your gross income, before any deductions. Your loan officer will qualify your debt-to-income ratio, which is usually not over 50% (although there are exceptions).


With a VA loan, there is no down payment. The VA Funding Fee is rolled into the loan. If the seller pays some or all of your closing costs, then you may be able to get into a home with little cash to close.


Your new house payment has to make sense for your income. You don’t want to put yourself in a position where you can’t afford the payment or where you can’t have a good quality of life because of the payment. However, in some areas, rent is as high as a mortgage payment.

My best recommendation is to contact a mortgage broker who is licensed in your state. Brokers have more options than banks. Brokers can often get a lower interest rate than a direct lender can offer. Brokers can usually close faster than big banks. Brokers are better, and yes, I am biased, because I am a mortgage broker, licensed in California and Washington states.

May God bless our country, our U.S. Military and Veterans — and, all of us, God’s beloved children.

Forget to Make a Payment?

I heard from several people this week saying they forgot to make a payment on their credit card or auto loan, and asking what they should do.

I will tell you straight up: missing a payment can devastate your credit score. If your score was top tier, it can topple by 70 points in a day! Why?

Because the credit bureaus think something terrible has just happened in your life, and now you are high risk.

If your score was mediocre, then missing a credit card payment can drop your score by 30 to 40 points. That’s still enough to knock you out of qualifying for a good auto or home loan.

There is no grace for “I forgot.” If there was an extenuating circumstance, such as one of the following, you might get some grace from the creditor:

  • Loss of income due to the impact of Covid-19.
  • Death in the family.
  • Natural disaster, such as a hurricane, tornado, or flood.

If you had one of the three circumstances above, contact the manager and have a discussion. Two of my book readers got their late payments removed and late fees reversed due to having a natural disaster and resulting loss of income.

On the other hand, if your missed payment was due to sloppy financial management, you are not going to get any sympathy. Here’s what I recommend:

How to Avoid Late Payments

  1. Set an alarm on your cell phone the day before and the day of a payment being due.
  2. Write on a calendar payment reminders.
  3. Post a notice on your bathroom mirror and on your refrigerator. Some people needs lots of visuals.

Additionally, you can set up automatic payments; but don’t set the date of payment on the last day, because that can backfire if it falls on a holiday or weekend. Set the pay date early. And, pay attention in case your creditor sells the account, which will require you to adjust your auto-payment in order to prevent it from going out (and causing a late payment).

Cleaning Up Bad Credit is Like Cleaning the Floor

You cannot mop up the mud while you are wearing muddy boots and expect to have a clean floor. Likewise, how can you repair your credit when you are missing payments currently? You cannot.

If You Made a Mistake Recently

Learn from your mistake and take action so it doesn’t happen again. Use the three ideas above. Ask for grace if you might qualify. People make mistakes and life goes on. Onward and upward!

Thank you for reading this article. I wish everyone the best with your finances and credit.

Are You Discriminating Against Yourself?

That headline sounds odd, but the fact is that some people assume they don’t qualify for better credit or for a home loan — when, in fact, they do!

Check out these legal facts:

FACT: A credit card company cannot give a young person a lower credit limit based on age.

WHY THIS MATTERS: The lower your balance-to-limit ratio, the higher credit score you get. Creditors cannot penalize young people by giving $500 limits to people under age 22 and $1,500 limits to people older. Age-based credit is prohibited by the Equal Credit Opportunity Act (ECOA).

FACT: A lender must allow you to include welfare, disability income, any type of public assistance income, social security, income child support, spousal maintenance/alimony in your loan application — as long as that income will continue for at least three more years.

WHY THIS MATTERS: If your income qualifies to make the mortgage payment, no one can deny you a loan based on the source of your income.*

FACT: A lender cannot deny your loan because you won’t live long enough to pay it off. Age discrimination is illegal. Some people assume they are too old to get approved for a 30-year loan, but that is not so.

WHY THIS MATTERS: If you are 100 years old and you want a 30-year fixed rate for the lowest possible payment, no one can deny you that loan based on your age. If you don’t live to 130, then you can pass on the ownership through your will. Your heirs can refinance into their name(s), or sell the property. This creates generational wealth.

If you have a question about discrimination and qualifying for a mortgage, let me know. U.S. laws are clear and very strict that any unequal treatment based on age, sex, race or color, national origin, religion, marital status, or the source of income is illegal.

*It goes without saying that the income must be from a legal source, not from illegal money laundering, etc.

You can read more about Your Equal Credit Opportunity Rights here.

A Message for Black Americans

Donnell Williams, owner of Destiny Realty and President of NAREB

“Black homeownership is where we build financial stability. We have security. We create generational wealth.”
~ Donnell Williams, President, National Association of Real Estate Brokers

I read this quote in a magazine for mortgage professionals, The Scotsman Guide. As a homeowner and a mortgage broker, I agree completely. It’s what I read next that shook me up.

Although Black home ownership has increased to a 12-year high earlier this year, the percentage of Black Americans who own homes is only 47%. That is 29 points below white home ownership, which reached 76% for the same time period (second quarter 2020).

Why is this? And more importantly, what can be done so that more Black citizens achieve the stability and security of owning their own homes?

As a mortgage professional, one thing I can do is offer hope in the form of some little-known facts. Facts that can help more people realize that they can become home owners sooner than they knew!


  1. There are home buying programs with only 3% down payment.
  2. There are down payment assistance programs to help provide that 3% down. (These vary by state. Your mortgage broker is the best source for getting one.)
  3. If you have a boarder or room renter, you can count that income when they have been paying you for 10 months in a manner that can be verified (check or consistent deposit into your bank account — not cash under the table).
  4. You don’t need perfect credit to qualify for a home loan.
  5. Medical collections can be ignored with a FHA loan.
  6. Up to $2,000 in credit card collections can be ignored with a FHA loan.
  7. You may qualify for a FHA loan 24 months after a Chapter 7 bankruptcy is discharged.


  1. Down payment money must be verified, meaning you must show the source by providing two months’ bank statements. Cash is not allowed. More about that here.
  2. You should be on track with your finances, meaning no more than one 30-day late payment (preferably 0 lates) in the past 12 months.

I hope more Americans will make home ownership a reality. The sacrifice to save money is worth it. The sacrifice not to buy a snazzy car is worth it. Remember: house first, car second. No exceptions.


I have a tee short that says, “Brokers are Better” for a reason. A mortgage broker has more flexibility and more options for home buyers — in addition to better rates most of the time. Brokers close loans faster and with less paperwork, in my experience. Therefore, it is my recommendation that you reach out to a mortgage broker licensed in your state.

By the way, I’ve never seen or heard of a mortgage broker who violated the Equal Credit Opportunity Act. It does not matter what is your color, race, national origin, sex, marital status, age (as long as you are of legal age), or if your income comes from public assistance.

Thank you for reading this post and for passing it on to other good people who it may help.