Help For Homebuyers with Thin Credit

Good news for people who want to buy a home but don’t have much credit to show!

“Thin credit” means there is not enough data on the credit report to make a determination of being credit-worthy. This is especially tough when you’re trying to qualify for a mortgage to buy a home, because getting a mortgage has more requirements than getting a credit card or auto loan.

As a mortgage broker for over 23 years, my definition of thin credit is having less than three accounts that are either open or were active in the last five years. Example: one credit card open and one car loan paid off six years ago is a thin file.

Experian’s definition is stricter than mine: less than five accounts on the credit report. I like my definition better, because I have successfully closed loans for many people with three accounts on their credit report. (Also two accounts, but I had to go with FHA rather than conventional.) Nevertheless, Experian prefers five accounts for their credit scoring purposes.

Back to the good news!

Your rent payments can be included on your loan application to beef up your credit profile. Here’s how it works:

You give your loan officer proof of payment for the most recent 12 months’ rent, paid on time. Your loan officer manually adds that into your loan application and uploads it to Freddie Mac’s conventional loan.

The mortgage lenders can choose either Fannie Mae or Freddie Mac as a source of money. Your loan officer needs to choose Freddie Mac, also known as LP (Loan Prospector software system). This is for a conventional loan, which is the best and cheapest financing.

It is important to pay your rent on time and to keep a consistent record of doing so. Don’t split your monthly rent into two payments. Don’t pay by Zelle one month and by check another month. Pay the same way every month, on time, and keep a record. That will make it easier for you to get credit for paying rent.

Thank you, Freddie Mac, for taking this step to help more good people become home owners!

Please pass on this information to your loan officer and to your realtor.

Change to Fair Credit Reporting Act (FCRA)

You might not know this, but the current law allows credit bureaus to ignore dispute letters from credit repair companies. And that’s not all!

They can also ignore a letter from the consumer if they believe it was a template that came from a credit repair company.

Enter H.R. 7919! This bill introduced into Congress by Al Lawson, Jr. (FL) would remove the language that allows credit reporting agencies to ignore correspondence from credit repair companies. It has not yet passed. Proponents are working to gain bipartisan support to increase the chances of success.

In the meantime, you can see how D.I.Y. credit repair can work brilliantly — when you don’t use those legalese letters that look like they are from credit repair companies. That is why Repair Your Credit Like the Pros includes letters that are written in normal consumer language and are completely editable for readers who request the .docx file here.

See H.R. 7919 here. See the book here.

Results from following Repair Your Credit Like the Pros posted by Kara Sutherland on Amazon:

Credit Repair Like the Pros works!

.Thank you for reading this news update about H.R. 7919.

70% of Medical Collections OFF Credit Reports

Starting today, July 1, 2022, Experian, Equifax, and TransUnion will remove paid medical collections from credit reports.

From now on, medical debts less than $500 will not go onto credit reports.

There will now be a ONE YEAR grace period between the time a late medical debt occurs and when it goes on the credit report.

This is all according to a report titled “Medical Debt Burden in the United States” by the Consumer Finance Protection Bureau (CFPB).

They estimate that these new practices will remove about 70% of negative medical accounts off of credit reports.

That is GOOD NEWS for sure!

For your edification and inspiration, I wrote Credit Repair MINDSET. You can read the first chapter by using the “Look Inside” feature here In the companion Journal, I include my own personal story of going from a broke renter to a homeowner. .

Get Fed Student Loan Default Off Your Record Now!

If you know anyone who has a federal student loan in collections or in default, this is great news that they need to know!

As of June 2022, the student loan rehab program no longer takes 9 months of payments to get it off your record and off your credit report.

For the first time ever, they will remove the collection/default status off your credit report in as quick as 1 to 2 months!

Today, I had a telephone conversation with Representative Angelica at Student Aid who explained the process to me:

  1. Call (800) 621-3115 to get your personal, individualized rehab plan. Have your tax returns or income documentation ready, because your new monthly payment will be based on your income and financial situation.
  2. Submit the form they provide and your documentation. They will guide you through the process.
  3. As soon as your submission is verified and accepted, they clear the default status off your Credit Alert Verification Reporting System (CAIVRS), which is used by the credit bureaus and by mortgage lenders. Thus, they clear your credit report of the default status for you — and it can be done in two months or less!

Note: This information is not on their website. During hold time, the message states they are updating their website as fast as they can. On the telephone, Angelica told me you MUST CALL to get this rehab program, and it cannot be done online.

Thank you for reading this post and passing it on to others who need the information.

Available on Amazon.
Become an expert on how credit scoring works and achieve top tier credit to save money and gain respect.

“Student Debt Doctor” Forced to Give Refunds: Link Fixed

If you were a victim of the “Student Debt Doctor” scheme, the Federal Trade Commission says they must give you a refund.

The FTC is forcing them to refund $2 million to people who paid for their service. If you receive a check, cash it immediately, because it’s only good for 90 days. More details here. (link fixed)

Both the CFPB and the FTC are on the hunt for credit repair and debt relief businesses that are violating law. If you operate any type of financial repair business, make sure you know the state and federal laws, especially concerning things like:

  • Telephone solicitation rules
  • What you cannot post on your website
  • Why you can’t advertise an increase of a certain number of credit score points
  • Signatures required on the contract (the customer’s signature is not enough)
  • Waiting periods required for the state you do business in
  • Disclosures required to give to the customer
  • And more.

    Don’t fail to know and follow the laws, or you will be a “sitting duck” for an investigation and possible lawsuit.
Paperback $8.99. Kindle $4.99. Journal $6.99

“Student Debt Doctor” Forced to Give Refunds: Link Fixed

If you were a victim of the “Student Debt Doctor” scheme, the Federal Trade Commission says they must give you a refund.

The FTC is forcing them to refund $2 million to people who paid for their service. If you receive a check, cash it immediately, because it’s only good for 90 days. More details here. (link fixed)

Both the CFPB and the FTC are on the hunt for credit repair and debt relief businesses that are violating law. If you operate any type of financial repair business, make sure you know the state and federal laws, especially concerning things like:

  • Telephone solicitation rules
  • What you cannot post on your website
  • Why you can’t advertise an increase of a certain number of credit score points
  • Signatures required on the contract (the customer’s signature is not enough)
  • Waiting periods required for the state you do business in
  • Disclosures required to give to the customer
  • And more.

    Don’t fail to know and follow the laws, or you will be a “sitting duck” for an investigation and possible lawsuit.

Is Your Dispute Letter Convincing?

One of the best “secrets” of credit repair success is that your letter needs to make sense to the person reading it.

Oftentimes when someone emails me asking, “Which letter should I use?” the answer is, which letter makes sense? Put yourself in the place of the person opening the letter. Then ask yourself these questions:

  1. Does it look and sound like a genuine, sincere letter (rather than a template off the internet)
  2. Is there any documentation or proof or a good reason for the dispute?
  3. Is it clear what action they want you to take? (Are they asking for a detail to be corrected, or are they asking for the entire account to be deleted?)

Let’s say that there is an old, paid off collection account that you don’t recognize as yours. You also see that it is with a retailer located in a different state, one you’ve never been to and have never done business with. You remember that there was a misspelling of your name on your Personal Identifiers, so it is plausible that this account belonged to someone who has a similar name to yous.

Now you ask yourself, what should my dispute letter say? Using common sense, you can see that one of those legalese “609 letters” is not the best, most convincing choice. Your letter should explain the issue just as clearly as if you were writing to your grandma. Also…

What documentation can you include to make your letter stronger? Since you live in Alabama and the retailer is in New Jersey, a state you’ve never been to, why not send a copy of your driver’s license showing both the correct spelling of your name and your location with your dispute letter that explains why this account does not belong to you?

Can you see how putting yourself in the place of the person reading the letter will result in success better than mindlessly firing off a template as a “hit or miss” effort?

If you’d like a boost of inspiration and encouragement, pick up my brand new book, Credit Repair MINDSET. It’s newly released but already getting positive reviews. The paperback is only $8.99; Kindle $4.99.

Credit Repair MINDSET is here!

I am excited to announce my newest book.

Here’s a peek at what you’ll gain from Credit Repair Mindset:

  • How to turn a negative financial event into a personal advantage.
  • How you can use the spoken word to change the spiritual atmosphere and outcome.
  • Take a quiz to discover the cause and cure for poor credit.
  • Where to set your personal financial guardrails to avoid common pitfalls.
  • Overlooked, ignored, belittled, or disrespected? You’re not the only one, so get inspired by people who went from rejection to respect.
  • You don’t beat procrastination with the old, worn-out “time management” advice, so check what the new science says.
  • The big lie about what it takes to create a new habit exposed! (And the truth revealed.)
  • Personal stories from many walks of life to encourage and inspire you.
  • What it takes to become a homeowner and build wealth in real estate.
  • Encouragement to fulfill the Call on your life.

Note: Each chapter ends with a Declaration for Meditation and a Scripture.
I wrote this book from a Christian viewpoint. If that offends you, then you might want to pass this one up.

Available on Amazon here.
Paperback $8.99. Kindle $4.99. Journal is $6.99. Here

New! Tip for Dispute Letter Success

Last week, I was privileged to hear a lecture given by the highly influential and esteemed attorney Mr. Robby H. Birnbaum. Mr. Birnbaum practices before the CFPB, the Federal Trade Commission (FTC), offices of state attorneys’ general, state banking and financial services departments and federal and state insurance regulators.

A primary take-away for me is that the credit bureaus now, in 2022, will not consider a dispute on the basis of “unfair.”

This strikes me as very odd, since a big portion of credit law is based on The FAIR and Accurate Credit Transactions Act that was passed by Congress and signed into law in 2003.

If you were reported as late unfairly due to illness, loss of income, pregnancy, a liar, a scammer, or anything else — the credit bureaus will not hear your cry of “Unfair!” Therefore, don’t put that word into your dispute letter.

What they WILL consider is a dispute based on one of the following:

  • Inaccurate
  • Incomplete
  • False
  • Incorrect information reporting
  • Erroneous
  • I don’t recognize this
  • Not mine
  • Outdated
Available here

Settlement versus Deletion

I’ve had some questions come in about getting a settlement agreement on a collection or charged off account and how that plays out in having the account deleted from your credit report.

A settlement is an agreement to pay less than the balance showing. Saving money is always a good thing — especially when the balance might include late fees and a high interest rate. If the past due account has been sold to a collection company, then they probably purchased your debt (along with a bundle of other people’s debts) for pennies on the dollar.

A collection agency can afford to settle less than the balance and still make a profit. 

If the balance is $6,000 and they settle for $3,000 and they report to the IRS that you profited by $3,000, that is okay. You will come out ahead by saving $3,000 and reporting an “income” of $3K to the IRS. Always take the settlement when you can — which is most of the time.

The purpose of the settlement is so they make some money rather than zero. Your purpose is also to save money and to stop the stress and harassment at the same time. You also want to get it deleted from your credit report, which is another step in the negotiation process.

Settling for less than the balance does not remove it from your credit report. The best settlement agreement includes both saving money and deletion from your credit report.

The #1 rule of getting a settlement is to get it in writing. If it’s not in writing, you run the risk of another individual at the collection company contacting you later for more money, claiming you did not pay all that you owe. That very thing happened to one of my book readers recently; and fortunately, he had followed Chapter 15 and gotten the agreement in writing, which shut them up in a big hurry.

When their Settlement Agreement Letter states that they will accept $3,000 for account # 1234 if paid by the end of the month, then that ensures they won’t ask for more money later. IT DOES NOT REMOVE IT FROM YOUR CREDIT REPORT.

If the letter states that they will report the account as “settled and paid,” then that wording goes on your credit report and confirms that the account is yours, because you agreed to the amount and paid it. 

You are doing yourself a disservice to have “settled and paid” added to the account. You don’t want that! You want them to agree to delete it from your credit file upon receipt of funds. 

Working as a mortgage loan officer doing debt payoffs in a refinance, I also negotiated many settlements for my homeowner clients. I share how I did this and exactly what I said in Chapter 15

Sometimes, the creditor absolutely refuses to provide an agreement to remove the account from your credit file, and no matter how long you hold out, they won’t budge. In that case, use the strategy in Chapter 16, even if your account is small and not large.

An agreement that is not in writing (letter or email), is a tease, not an agreement. You must get the agreed upon amount — with any added terms (all in your favor) — in writing so that you can save it for future use. 

If you receive a threatening phone call or letter, especially if it is a large balance or from an attorney’s office, do not ignore it. Check to see if it is past the Statute of Limitations in your state; and if not, negotiate a good Settlement Agreement that is put into writing.

Good luck! Others are doing this, and you can, too.

COMING SOON!!! 

One-of-a-kind new book coming soon.