This week the big three reporting agencies TransUnion, Equifax and
Experian spent six hours giving testimony to Congress. They were asked questions regarding every aspect of their companies ranging from dispute resolution practices, cyber-security and the fact they have no other competition in their space.
With Maxine Waters, a long time consumer advocate at the helm of the financial services committee, you can bet the farm that this is not going to be a comfortable year for the bureaus.
Waters has already introduced a bill that would require yet another overhaul of the credit reporting system as well as amendments to the Fair Credit Reporting Act. Subscribe for updated information as it becomes available.
Many thanks to Chad Kusner, Credit Repair Resources LLC, for this information. CCCR offers a credit report analysis and consultation service for people who need credit advice without a full credit repair. More info here.
Build and Protect Your Credit Like the Pros guides you to achieving A+ credit in the shortest time possible.
Having a top tier credit score saves you money on insurance premiums, interest rates, and gains you respect in the community.
“Must have” for every American. Available on Amazon here.
Do you have a part-time gig making money on the side? If so, you’re not alone.
44 million Americans and half of all Millennials (people born between 1982 and 2002) side hustle for extra income, according to a recent survey.
Some of the ways people earn extra cash:
- Delivery driver (for Amazon or another company)
- Seller on Etsy
- Dog walker
- Household help
- Graphic design
- Personal shopper
- Uber driver
- Proofreader, copy editor
Earning money is fantastic, but if you’re applying for a home loan, here’s what you need to know about part-time income.
There are two components to getting approved:
Down payment and Income
MONEY FOR DOWN PAYMENT
You may use the funds for your down payment as long as they are in a bank account and can be “sourced,” meaning show where the money came from.
You may not use cash from your home safe or hiding under your bed. That is called “mattress money” and must be deposited into a bank account for three months before it can be used for your home loan.
To include side income or part-time income to qualify for the loan payment, you must have had the job/income for at least 24 months. Also, you must verify that income with a W2 or a 1099 and tax returns. As long as the proper time and verifications are in place, then your awesome side income can help you qualify for the loan you need.
I hope you found this information helpful. Thank you for reading! If you are buying a home in WA or CA, I am licensed in those two states and would be happy to help you. Online application here.
If you plan to buy a home when the snow melts and the days turn to spring, now is the time to get ready. With a little forethought, you will qualify for a better loan and lower monthly payment.
Review Your Last Two Bank Statements
Ideally, your bank statement will be no longer than two or three pages. If your statement is longer, you can remedy that now before you are required to submit bank statements to the lender.
If you use debit for your purchases, use cash instead. Also, make sure you are not spending money on a daily basis.
Now is the time to go on a spending diet and save money for your new home. Here’s a good way to start…
Circle all charges related to eating out, including fast food, convenience stores, restaurants, and even gourmet coffee. Now add up the total. Are you surprised? Should you and could you lower that amount by preparing more of your own meals and snacks? Can you save $50 per month? Some people can easily save $250 per month by altering their habits.
The sacrifice now to own a home is well worth the effort.
Next, look at other non-essential charges. Where could you cut back in the interest of getting into your own home? (Or your next step up home?)
Last, look at the ending balances. Is the balance trending upward? Underwriters like to see that you are living below your means, saving money, because the majority of the time, the house payment is higher than the rent payment. This is for your own sake as well, because owning a home comes with more expenses than renting.
Try the Home On for Size
What I mean by that is, set aside the amount of money that equals your new upcoming mortgage payment. Get used to living on less money now so that you don’t suffer payment shock later. Make sure you feel comfortable with the payment. If not, then you know now that you’ll need a smaller loan (and lower priced home) than what you might have imagined.
Avoid ALL Major Purchases
This is a big one, because it’s knocked out so many people from having their ideal home. You must not buy a new car, SUV, truck, or take on any new payment before closing on your house.
I’m thinking about one particular person who saved diligently for an entire year and worked on repairing and improving her credit. She even hired a professional credit repair service. It worked and all was well until she “celebrated” by buying herself a brand new $40,000 vehicle. The next week when she applied for a home loan, she was stunned to learn she did not qualify. Tragically, she’d chosen to buy a vehicle (which goes down in value) rather than real estate which increases in value. With the auto payment, she could no longer afford a home loan; thus, she sealed her fate as a renter for five more years.
Thank you for reading my blog.
For all the best tips on building a top tier credit score, see Build and Protect Your Credit Like the Pros here.
Although the following story seems like a joke someone would tell at a bar, it’s actually a true story. To protect their identity, let’s call them Bob and Mary.
Bob and Mary did not get along, and eventually Mary decided to call it quits after five years of marriage. In the courthouse going through the divorce proceedings, it almost seemed to Bob like the judge had a crush on Mary because things just weren’t going his way; after all, Mary was awarded the kids, the car and the house, and poor Bob seemed to be just left with the credit card debt.
Life moved on with old Bob though, and even though his was living at a Motel 6 and riding a skateboard to work, he decided not to wallow, but to better his attitude and his way of life. He saved every penny, paid off the credit cards and even put enough in savings for a down payment on a home.
After seeking out his trusted mortgage broker, Bob walked in to her office all ready to go. After listening to Bob explain his qualifications, the broker enthusiastically pulled Bob’s credit.
Lo and behold, she saw that Bob had a 550 credit score with a string of late payments.
Bob dismissed this issue with wave of his hand as he said, “Don’t worry about those lates, because they don’t even belong to me. Those are my ex-wife’s.”
Then the mortgage broker explained that they can’t just ignore them. They are on his credit report and have affected his score.
Bob replied, “You don’t understand. I was there at the court house! My ex got everything, including the house and the car, so those don’t apply to me.”
No Bob, you don’t understand… and neither do most people…
When it comes to your credit report, the divorce decree is pretty much worthless. It does not protect you!
The creditors don’t care about it and the credit bureaus care even less. Why should they? They never agreed to the separation of debt, and they are much more likely to get their money if there are two people to go after instead of one.
Creditors are not party to a divorce. So regardless of the divorce decree, the creditors can still hold both parties responsible.
Sure, Bob could sue Mary for not holding up her end of the bargain, but suing someone who doesn’t have the money to pay their bills is relatively useless.
Bob should have separated his credit from Mary’s credit as soon as he knew she was filing for divorce.
If you know someone who is going through a divorce, make sure they see this message, because it is imperative that they separate their credit immediately. Close all joint accounts. For auto and mortgage loans, the loan will have to be refinanced to remove one person’s name from the obligation. There is no other way to do it.
A big thank you to Anthony Iacobucci, National Credit Care, for permission to post this client story. His contact info is below. He fixes credit for people like Bob–or anyone else who needs their credit restored. For DIY credit repair, this 5-star book is available on Amazon here.
Regional Director and Manager
National Credit Care
Office: (866)595-6313 Ext. 410
If you want to buy a home in 2019, this news is for you!
Earlier this week, the top wholesale mortgage lender in the United States announced that they are dropping their interest rates to unprecedented lows with the new Bank Buster program!
What does this mean?!!?
The insider secret is that they are giving mortgage brokers loans at $0 upfront profit to themselves in order to scoop up a bigger share of the market. That’s right…
They are at war with the banks! Perfect timing, too, because more and more people are discovering that they can get better interest rates, faster closing, and better service with much less stress when they go with a mortgage broker.
A mortgage broker shops wholesale lenders to get you the best loan.
A direct lender or a bank has only their own loans.
Banks are great for checking accounts. But come on, they cannot compete with a mortgage broker who specializes in only one thing: mortgage loans. Here’s what I’m talking about…
- Mortgage brokers close loans faster. For example, as a broker, I closed loans that were a “rush request” in only two weeks — from application to closing! I’ve never heard of a bank doing that. They usually take a month or more to close.
- A mortgage broker meticulously manages your loan from start to finish. They don’t pass it off to a team member and then focus on getting the next application in line.
- Mortgage brokers have more loan choices and are not limited to the bank’s limited portfolio of loans.
- Loan officers at banks are not required to take the 20-hour training and pass a vigorous test. Nor are they required to get a background check, fingerprinting, and get licensed. Therefore, they do not have the same expertise. Truth is, there are loan officers who are guilty of fraud hiding in banks.
If you want the best steak, go to a steak house.
If you want the best Chinese food, go to a Chinese restaurant.
If you want the best mortgage, go to a mortgage broker.
It makes sense! And now, with the new Bank Buster* program, watch out! Because if you’re not checking with your mortgage broker, you could very well be setting yourself up for higher pricing, more stress, and a longer closing time.
FACT: A mortgage broker is required by law to get you the best loan at the lowest interest rate they can. That is not true for direct lenders, credit unions, or banks.
* This new super low interest rate loan program requires a credit score of 640. If your score is 639 or lower, here are two resources for do-it-yourself credit improvement. Both books are available on Amazon.
Thank you for reading and passing on this information.
Feel free to re-blog and post on social media.
I am a licensed in Washington and California, NMLS # 1284134.
The important thing about looking ahead is to prepare so that we aren’t caught unaware.
With that in mind, here are my comments on the predictions for the New Year.
Forecast: Interest rates will go up.
Comment: For the past five years, economists predicted rates to rise. Only in 2018 were they right. The year ended with rates about .5% higher than 12/2017. My opinion is that rates will increase moderately in the first quarter and then go flat.
Forecast: House sales will increase but at a slower pace than the past two years.
Comment: I don’t see how that could be wrong. Young people are coming into home buying age faster than old people are going into assisted living. Immigrants also need housing. The frantic, insane bidding wars are over — and that’s good.
Forecast: About three quarters of economists believe a recession is coming somewhere between late 2019 and 2021.
Comment: Get out of debt. Stay out of debt. Have a savings as a cushion to live on in case your income drops or you need to find another job. If you have a financial safety net and top tier credit, then you can afford to purchase luxuries. If you are thinking of going into debt (such as taking a home equity loan) for non-essentials like a prettier kitchen, then that is unwise and a bad idea. Save the home equity loan option for a true need such as when your furnace quits or your roof leaks.
Additional comment: Having too much debt lowers your credit score. When your credit score is low, you lose financial power. You lose the ability to get the lowest insurance premiums and lowest interest rates. You lose respect in the business community. That is no way to live!
If your score is below 740, then take steps to educate yourself and improve your finances. YOU are in control of your credit score. You are not a victim to FICO. Learn what it takes to achieve top tier credit and then proceed with confidence!
If saying goodbye to rent and buying your own home is your goal, then don’t procrastinate. Speak with a mortgage broker (not a banker) to learn your options.
Here’s to the New Year!
Let’s make 2019 the best year so far. How? By writing down a plan and then working the plan. A goal that is not written down is only a dream. Turn your goal into reality by having a written, workable plan; and then share that plan with someone you can trust to keep you accountable.
Happy New Year! May we have peace and God’s guidance every day and every step of the way.
What you don’t know about collections can hurt your credit score.
Here are two facts most people don’t know:
1) The balance does not affect your credit score.
Whether you owe $100 or $10,000, it makes no difference in your credit score. A collection is a collection is a collection. Why?
Because a large balance might indicate a person has a high income; whereas, a small balance might indicate a person had a low credit card limit and therefore has a low income. Since it is illegal to consider income for credit scoring, the credit reporting agencies are barred from making a difference in score due to the balance.
This is important to know, because if you’re thinking your score will go up as you pay down the balance, you are in for a disappointment. The only way you will get your score to go up is by the collection aging older and older, until eventually it is off your report. (Unless you get it removed early.)
2) Paying off a collection will lower your credit score.
This is counter-intuitive and unfair. Nevertheless, that is the way the system is set up. As per above, your score cannot go up by lowering your balance on a collection account. On top of that, when you make a payment it updates the “Date of Last Activity” (DLA) to current, and that reduces your score.
A lot of good people try to do the right thing by paying off an old collection account — and then they are penalized for it!
The Best Way to Handle a Collection Account
If your collection account is old, then let it age off.
If your collection account is medical or less than $2,000, then you will not be required to pay it off in order to get approved for a home loan.
If your collection account is large and/or the collector is contacting you for payment, then negotiate a settlement with the stipulation that it will be removed from your credit report when it has been paid in full as agreed.
If you receive notice of legal action, do not ignore it! Work out a settlement, or if necessary, go to the court hearing and explain your situation. If you blow off a court hearing, then you automatically lose by default, so that is the worst thing you could do.
There are reputable, licensed credit repair companies that can help you with negotiations and legal issues. I do not recommend attorneys or lawyers (especially if they advertise all over the Internet–those are usually the worst). I recommend credit repair specialists who have over 10 years’ experience, because, in my opinion, they work faster, better, efficiently, and get better results.
Thank you for reading and passing on this info to others via shares.
Experian has announced that it wants access to view people’s bank accounts. It wants to see who you’re making debit deposits to, who you’re paying, and when. It wants to look at items that do not report to the credit bureaus.
For instance, Experian wants to look at your cell phone payment, your utility bill, your Xfinity bill, and possibly your rent payment.
They’re calling this new program “Experian Boost.”
Their excuse for gaining this extra access into your personal life is that they claim it will improve credit scores for people who have thin credit, meaning not much credit.
But here’s the problem…
The Experian Boost program uses the FICO Score 8 model, which mortgage lenders consider outdated and don’t even use anymore. Mortgage companies are using FICO10. So this spy action won’t help you qualify to buy a home.
The good news…
is that you must give Experian permission in order for them to access your bank accounts. No permission from you = no spying by Experian.
This new “pioneer program” (as Experian likes to brag) is scheduled to come out in 2019.
If you sent a letter of dispute to Experian, Equifax, or TransUnion stating that something was not 100 percent correct about an account, then there might be a notation that says account in dispute or disputed by consumer.
If you hired a professional credit repair service that disputed on your behalf, then the same thing applies.
There’s a Good Reason for the Dispute Notice — and It Helps You
If a negative account (late payments, collection, anything bad) is on your credit report, it lowers your score. If the negative account is false, it would penalize you unfairly. Therefore, the credit bureaus remove the disputed account from the mathematical scoring system. Interesting, as this opens a door of opportunity!
This was a strategy credit repair services used in the past. They would send a dispute, your score would increase, and then you could quickly apply for a mortgage while your score was up. But wait!
The mortgage lenders caught on to that scheme and put a stop to it. They didn’t want risking hundreds of thousands of dollars on a borrower who wasn’t honestly credit worthy. So they made a new rule: No loan approval until all disputes are removed.
Removing a Dispute Notice
When the dispute has been resolved, the notice will automatically be removed. No worries.
But, if you need to get a mortgage approval before the resolution, then you will need to send a request to the credit bureaus asking for the dispute notice to be removed. OR, in some lucky cases with mortgage brokers, the lender may only require that you write a letter for your loan file that states the account is no longer in dispute (such as when there is a zero balance).
Fix Your Credit First, Apply For a Home Loan After
If you’d like to buy a home, your first step is to review your credit situation and make sure it qualifies. Do not race out to visit open houses and engage a professional real estate agent when your credit is badly in need of repair, because that is a waste of time and emotional energy for everyone — especially you!
Don’t be like the mom with four children who signed a purchase contract before she applied for a home loan. Here she was in contract, and her credit didn’t even qualify! Her thinking was, if I show a lender my contract, they’ll know I’m serious and approve me.
Sorry, but it doesn’t work like that. Having a signed purchase contract in no way influences the lender for approval. The story got even worse…
…not only had she signed a purchase contract, but she had given notice to her landlord and couldn’t stay in the apartment longer. She and her children were about to become homeless… if her father had not generously opened his house to the family.
What You Need to Know About the Law
You have the Fair Credit Reporting Act and the Fair and Accurate Credit Transaction Act to protect you from false and untrue items on your credit report.
Your credit report is supposed to be 100% accurate, not 99% accurate. If there is any negative item, such as a late payment notation, an incorrect account number, an incorrect date, or an account that does not belong to you showing on your report, you have the right to have that corrected or removed.
Good to Know!
The dispute notice is a result of the process. As long as you don’t intend on applying for a home loan during the dispute process, there is no negative consequence whatsoever to having the note temporarily on your report. As soon as the inaccuracy is taken care of, the dispute notice will disappear.
This week, I received several emails from readers telling me about their success, thanks to following Repair Your Credit Like the Pros. One reader had their score increase by 70 points when inaccurate negative items were removed. If you need credit repair and don’t have the funds to hire a professional, pick up the DIY book from Amazon that has helped so many other people.
Conforming loan limits have increased to $484,350.
High balance loan limits have increased to $726,525.
If you want the best loan, a conventional loan, you can now borrow up to $484,350 without paying a higher interest rate for a jumbo loan. If you have not owned a home in the past three years, you can do as little as 3 percent down payment (5 percent down for previous home owners).
High Balance Limits
If you live in an area where the median price of homes is higher than the national average, such as much of California or in Western Washington, then you can borrower up to $726,525 without paying a higher interest rate for a jumbo loan.
Advantages of the Mortgage Broker
- Your mortgage broker (myself in CA or WA) can get you these loans now, today. The banks and other lenders are trailing behind at waiting until 2019 for availability.
- Your mortgage broker will shop wholesale, saving you money over retail (banks, etc.) Why pay more?
- Only the mortgage broker is required by federal lending law to get you the best and lowest interest rate they have available.
- A mortgage broker is required to take classes annually, to update fingerprinting/criminal background checks every three years, to have their credit checked regularly. Why would you go to an unlicensed loan officer at a bank or credit union for the most important financial decision of your life? Yes, I am biased, but for a very good reason!
Thank you for reading and passing on this vital information to your real estate agent and interested home buyers.
Carolyn Warren, NMLS # 1284134 Apply online here.