Getting you ready to own a home with credit repairs

In order to qualify for a mortgage, you will need to have a fair credit score – at least 620 (640 or more is better). We also have a special program for home buyers with a 580 credit score. We do help home buyers, with whom we have a client-relationship, with light credit repair recommendations. We also work with preferred lenders in Charlotte NC who are highly knowledgeable in credit repairs and can point out what needs to be done in order to raise a credit score by a certain number of points.

We try to help as many people as possible, but sometimes, the scope of credit repairs to be done is beyond what we can offer as a free service to home buyers. As a rule of thumb, if you have not had a bankruptcy (Chapter 13 is OK if  discharged), foreclosure, a car repossession (voluntary or involuntary) ,eviction or housing collection in the last two years, we should be able to help you. We usually can help individuals with credit score of 580 or above and individuals with no credit history. If we cannot help you, we recommend that you contact a credit repair company. One of the best credit repair companies in the U.S. is National Credit Care. This company can be reached at (866) 595-6313.

Many factors can affect your credit score. 35% of your score is based on payment history and several past due accounts have a significantly negative effect on your score, especially if they are recent (within the last 12 months). Your credit utilization is your total debt compared to your total credit (debt to income ratio) and makes up 30% of your credit score. If your credit cards are maxed out, it will have a strong impact on your credit score. The length of credit history makes up 15% of your score. A longer credit history gives out more information about your spending habits and how you pay your bills. Inquiries account for 10% of your score. Every time you apply for credit, the corresponding inquiry is added to your credit report. If you apply for credit too many times, it will adversely affect your credit score. Finally, the mix of credit accounts for  10% of your overall credit score. When you have different types of accounts and are managing them well, it shows that you are experienced in managing mixed credit.

Secured credit cards
Secured credit cards are a good method to increase credit scores in a short period of time. With a secured credit card, it is possible to raise a credit score by as much as 25 points within a couple of month. Secured credit cards can be used like regular credit cards. The difference between a secured credit card and a regular credit card is that a secured credit card does not require you to have a minimum credit score, so anybody can apply for one. Only a valid social security number is needed to open an account. There is a minimum security deposit required (usually $300 per card). That deposit is refunded to the secured card holder once the account is closed minus any outstanding balance (from your purchases) owed on it. There is also a non-refundable sign up fee. Timely payments on your secured credit card will be reported to all three credit bureaus on a monthly basis.

In some cases, a lack of credit activity or not having enough credit established can prevent home buyers from qualifying for a loan. Signing up for a secure card will help if you have no credit at all. If you have some credit, but not enough, you could sign up for regular credits such as Capital One credit card to raise your credit score.

Opting out of credit card offers
You can choose to opt out of credit offers through a lender to increase your credit score by a few points. This method won’t cost you anything and could allow you to qualify for a mortgage loan if you only need a few extra points to meet a certain credit score.

Worst things for your credit
Tax liens – If you don’t pay your taxes, you could be faced with a tax lien on your credit report. Unpaid tax liens remain on your credit report for 15 years, while paid tax liens remain for 10. Lenders will ask you to have all tax liens paid off or for you to have already in place a repayment plan to pay back the tax lien before you can qualify for a mortgage loan.

Judgments – In some cases, a creditor can take you to court and sue you for a debt, if other collections fail. If the lawsuit is accurate and a judgment is entered against you, it will remain on your credit report for 7 years from the date of filing, even after you satisfy the judgment. As with tax liens, lenders will ask you to have the judgment satisfied before they can qualify you for a mortgage loan.

Charge-offs – when you miss your payments for 6 months or more, a creditor may consider your account uncollected. If this happens, the creditor will write off the account and update your credit report as “charged-off” or “written off and uncollectible”. Charged-offs accounts remain on your credit report for seven years.

Debt collections – Creditors can hire a third-party debt collector to attempt to collect payment from you. Your credit report may or may not be updated to reflect a collection status.

Bankruptcy – Filing bankruptcy allows you to legally remove liability for some or all of your debts, depending on the type of bankruptcy you file. Your credit report will reflect each of the accounts you included in your bankruptcy. The bankruptcy information will remain on your credit report for 7 to 10 years, but you can sometimes begin rebuilding your credit soon after your debts have been discharged.

Foreclosure – In the event you default on your mortgage loan, your lender will repossess your home and auction it off to recover the amount of the mortgage. This process is known as foreclosure. When your home is foreclosed it can severely damage your credit, limiting your ability to obtain new credit in the future. A foreclosure will remain on your credit report for 7 years.

Car repossession – Whether voluntary or involuntary, a car repossession will show on your credit report. In most cases, lenders will want to wait at least two years after the repossession to consider giving you a mortgage loan.

Co-signing for a loved one
One of your loved ones may ask you to co-sign with him/her for a credit card or a loan. It is a normal thing to want to help a loved one. However, there are serious risks to your credit involved with such a decision. You won’t, most likely, be checking on your loved to make sure payments are made on time every month or that the credit card is not maxed out. If the person, for whom you co-signed, falls behind on their debt obligations, your credit score will be affected. When you co-sign for somebody, you are as responsible as that person for the debt. Co-signing is a decision you need to weight out before you decide to go forward with it.