Approximately 30 million Americans cannot qualify for a home loan because their credit is too thin. It is not bad credit blocking them out of homeownership, but skinny credit!

When a mortgage professional says a credit report is “thin,” it means there is not enough information on it to properly judge the risk of lending.

If you want to borrow $300,000 to purchase a home, and the only account on your credit card is a $50 gas card, that is not enough information for the underwriter to go by in order to determine if you are risk-worthy of a $300K loan.

In fact, FICO reports that they cannot award a credit score if…

You have only one account.

You haven’t had credit long enough to judge a payment pattern.

You haven’t used credit in two years.

Ideally, you want to have one or two major credit cards (Visa or MasterCard) plus another account, such as a store card, gas card. Even better if one of your accounts is a closed-ended loan, such as a student loan or auto loan.

Having a mix of a closed-end loan + major credit card + one more account is ideal for earning a top credit score of 740+ in one year.

If you keep your credit card balance low compared to the limit, and pay the entire balance on your credit card each month, and pay all loans and credit on time every month, then it only takes one year to go from 0 to 740.

All of this vital information and more is in Build and Protect Your Credit Like the Pros.

When you know how the credit scoring system works, YOU are in control of your credit rating. And that is how it should be. Your credit report reflects your personal financial integrity, so make sure yours is TOPS!

Did you send Experian a sincere letter asking for an investigation or disputing a negative item on your credit report? And did Experian send you back a form letter of denial with no specific reason regarding your account? You aren’t the only one!

The Consumer Finance Protection Bureau (CFPB) has filed a lawsuit against Experian for what they are calling “sham investigations.” Fake investigations. Not doing their job.

This has been going on for a long time, and I wrote about it in Repair Your Credit Like the Pros. This lawsuit is long overdue!

Here is what my colleague, Mr. Erik Kaplan, owner of the ethical credit repair service, THD Credit Consulting, wrote about it:

Why this lawsuit matters to you:

Your credit report should accurately reflect your financial history. When mistakes happen, you have the legal right to dispute them — and credit bureaus are obligated to conduct a reasonable investigation. If Experian or any bureau cuts corners, here’s how it can effect you:

• False negative information, such as incorrect missed payments or defaults, can lower your score.
• Errors that show higher balances or duplicate accounts can artificially inflate your credit utilization ratio, negatively affecting your score. 
• Mistakes that shorten your credit history or misreport public records like collections or bankruptcies make you appear riskier to lenders. 

In your next dispute letter, you might choose to mention this lawsuit and that you expect to receive a satisfactory response that includes (what you asked for, such as a deletion) or a specific explanation of the investigation, including the contact information for the decision-maker and how they arrived at their conclusion.

Remember, there is updated and new information in Book 2: Repair Your Credit Like the Pros DEEPER DIVE that you don’t want to miss.

For more information about the lawsuite, see here.

It is alarming how much misinformation is posted on TikTok and Youtube about credit repair.

People can post all kinds of nonsense

Here are some recent falsehoods being posted now, and I hope you don’t fall prey!

LIE: Someone has cracked the “Experian code.”
TRUTH: No one has Experian’s algorithm, and if they did, Experian would promptly change it.

LIE: Debt collectors must get your permission to buy your debt/unpaid account.
TRUTH: A creditor may sell your debt to a collector, and neither party is required to get your permission to buy or sell. So no, that is not a loophole for getting your bad credit removed.

LIE: You can “start fresh” with a CPN number.
TRUTH: You cannot hide your past credit by buying a so-called Credit Privacy Number, which is often a social security number for a dead person. That would be a scam!

LIE: We can get your bad credit deleted fast.
TRUTH: The law gives creditors and the credit bureaus 30 days to respond to your dispute. That is not “instant” or “fast” in my book. Plus, if they don’t give you the results you want, you then have to send a second dispute, taking even longer.

BE SMART! When you see some young person on a reel purporting credit repair strategies that seem too good to be true, they are! How much credit experience do you think these posters have at their young age? How many laws are they breaking? Check the company on TrustPilot and with the Better Business Bureau. If something smells fishy, it’s probably rotten. Don’t be naive. Don’t be taken advantage of.

Don’t believe the hacks on YouTube, etc. who claim you can get your student loans deleted because of FERPA violations — that is a lie and a scam!

They try to reel you in to their illegal credit repair lair by videoing falsehoods. Don’t fall into their trap. You will lose money and reap no benefit.

If DOGE looked into your student loans, that is not a violation of law, nor is it grounds for a dispute or a lawsuit.

You cannot sue FERPA! FERPA is a set of laws, not a person or organization. That claim is just stupid.

Currently, there are no avenues to have your student loans wiped out due to actions taken by Elon Musk or DOGE.

If you want to listen to one credit repair business owner’s full explanation on this topic, here is one that makes sense:
https://www.facebook.com/reel/1711804759404566

How you file your taxes is going to determine whether or not you can qualify for a home loan.

We all agree taxes are too high, and tax professionals are very good at subtracting deductions from income to lower what we pay in taxes. HOWEVER…

If you plan to buy a home or refinance in the next two years, it is important that you show enough income to qualify for the loan you want. And that means, you must know how the underwriter looks at income.

If you make $100K but after taxes, your Adjusted Gross Income shows $30K, you are in trouble when it comes to getting a mortgage.

The underwriter does not go by your gross income!

For 1099 and self-employed people, the underwriter goes by ADJUSTED GROSS INCOME, and then possibly adds in certain types of deductions.

What you need to know is that if you deduct the living daylights out of your gross income, you might not be able to qualify for a good conventional or FHA home loan.

Before you do your taxes, speak with your local mortgage broker so you don’t accidentally shoot yourself in the foot, as the cliche goes.

The other fact you must know is that underwriters require two full years of tax returns in order to calculate your self-employed income.

Please pass on this important information to your family and friends who might need it.

Are you trying to time buying a house with low interest rates?

The graph above shows 30-year fixed mortgage rates for one year. Notice that the low was October at 6.25% and the high is May at 7.5% We are not looking back several years, because rates that start with a 3 or 4 are not coming back for a very long time — if ever. (Graph from Mortgage News Daily)

Trying to time buying a house with the market is an amateur’s game. No one can predict world events, national catastrophes, unexpected wars, crazy market reactions, or anything else we have no control over.

Therefore, the best time to buy a house is when you want to stop renting and become a homeowner.

If rates drop dramatically a few years after you buy, you can refinance. But in the meantime, you also have to think about prices.

Rates go down and prices go up.

That is one reason the feds cannot lower rates too rapidly — it would create disastrous inflation on the housing market.

Homeownership is a longterm commitment. You buy because you want to own the real estate where you live and sleep. You want that security and freedom from renting. When your credit qualifies and you have the finances to afford the down payment, closing costs (seller can help with closing costs), and the monthly payment, then that is your time to buy.

What do the mortgage brokers, loan officers, and bankers know about getting the BEST mortgage for themselves and their own families? What do they know that they aren’t telling you? It’s all here in Get the Mortgage You Want Like the Pros.

I tell you which loan is best for each scenario, where to get it, what you need to qualify, and how to avoid needless add-on fees. Available in paperback and Kindle.

Just when you’re trying to save money by upgrading your home to clean energy, the greedy scammers sell you on an overpriced, junk-fee PACE loan.

PACE stands for Property Assessed Clean Energy. The loans are for homeowners to get energy efficient upgrades and to do disaster readiness. They are paid back through your property taxes. Red flag right there!

You don’t want a loan rolled into your property taxes! Keep your loans separate from your taxes. But there’s more.

The PACE loan is not your best option. You can get financing from your bank or credit union for cheaper than PACE (for most borrowers).

The PACE loan is usually about 5 percentage points higher than your first mortgage, which doesn’t make sense, because in the event of default, the PACE loan gets their money before the first mortgage lender does. Hence, it is not a riskier loan and should not carry a higher interest rate.

In addition, lenders can add extra nonsense fees to the loan — and have been found to do so.

PACE loans are marketed to homeowners, often by door-to-door sales people. They don’t always point out the superfluous fees nor do they mention that their rates are higher than what you can get elsewhere. They try to persuade you that rolling the payment into your taxes will be “seamless and easy,” never mentioning that raising your taxes puts your home in greater danger of being foreclosed on by the County.

Always shop and compare loans before you sign anything. Especially when it comes to something as important as your home!