Archive for August, 2008

Get Your Free Credit Report – Find Out What Everyone Else Knows About You

Saturday, August 2nd, 2008

It really is kind of scary to realize that strangers can pull your credit report and thus access your credit history – and that they use it to create a picture of your life.

All they need is your social security number – and that isn’t hard to get any more.

From that they can determine many things to some degree of accuracy.

For instance, they’ll see how many different addresses you’ve used over the past 7 years, how many new accounts you’ve opened, how many times you’ve gone shopping for major purchases, and even who you might have helped out by co-signing a loan.

The top portion of a credit report includes names, nicknames, old and current addresses, Social Security number, birth date, and current and previous employers.

Thus, a prospective employer looking at your credit report will see if you’ve been job-hopping. That’s something you’d rather they didn’t know, because it will definitely hurt your chances of being hired. He or she will also see if you move from city to city with regularity – and if you do, will weigh the odds of you leaving after they invest the time to train you in a new position.

They’ll know if you pay your income tax on time, because the report will show any tax liens, along with bankruptcies and judgments.

They’ll even know if you’ve changed spouses, because your credit report shows who shared responsibility for each debt.

Looking at your financial life gives people an impression of you, and of how you conduct your life in general. Of course that’s nobody’s business – but it’s a fact.

Strangely enough, the Big Three credit bureaus don’t always have the same information, because they compile their data independently of each other. That’s one reason why it’s important for you to obtain a credit report that shows the findings from Experian, Equifax, and Trans Union.

Usually, when a lender pulls your credit report he or she will find that the big Three have each assigned a different score – sometimes as much as 40 points apart. Some lenders will act based on the middle score, while others will go with the lowest score.

Because of this discrepancy, it’s in your best interests to know what information each credit bureau has – and is sending out in response to inquiries. (Remember, if you find an error on your credit report, you need to notify each of these credit bureaus, not just one.)

Conversely, if you’ve been a victim of identity fraud, you can contact one and it will notify the others.
Get your free credit report today – see if the world has an accurate picture of who you really are.

Your new car and Your Credit Score

Saturday, August 2nd, 2008

One very good reason to get a copy of your credit report and begin working to get your credit score as high as possible is the difference in interest rates you’ll pay if you need to buy a new car.

Research shows that a borrower with a score under 600 will pay over 18% for a car loan – while a borrower with a score over 720 will pay only 6 5/8%. As you might expect, the difference in the payments is staggering.

Rates for borrowers with scores between those ends pay less interest as their credit scores climb, but the rate doesn’t drop below 10% until you reach a FICO score of 660.

To add insult to injury, insurance companies also charge more if your credit score is low. While there doesn’t seem to be a correlation between credit scores and driving habits, there is a correlation with regard to paying the premiums regularly and on time. Insurance companies like to have their money, so they charge more at the outset, knowing they might not get the full premium.

Rather than use the FICO score in its pure form, insurance companies use a variation called an “insurance score.” This is recently coming under fire and several states are now regulating what information insurance companies can use.

Many states now prohibit insurance companies from using the following information in determining your score, and your rate:
• No credit history
• The number of credit inquiries
• Credit used for medical bills
• The addition of new loans
• The type of credit, debit or charge card used
• The amount of credit held
In other words, it looks like all they’ll really be able to use before long is your actual payment history. To find out the regulations where you live, go to your State’s Department of Insurance website.

Remember that in addition to your credit score, lenders consider the amount of your own money you are investing in a purchase. You’re obviously less of a risk if you’ve made a down payment of 20% than if you’ve gone in with zero down.

Who knows why it took lenders so long to figure out what the rest of us could plainly see – if you have nothing invested in a purchase you have nothing personal to lose, so you’re much more apt to simply walk away if the going gets tough.

So, if you can put together a substantial down payment before making a purchase, you should get much better treatment from the lender. Now might be a good time to take on that part-time job or become a week-end entrepreneur!


Friday, August 1st, 2008

The President has signed into law legislation that will allow HUD’s Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA’s existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.

Homeowners May Already Be Eligible For Assistance

Families should not wait to seek mortgage relief. Right now, homeowners can determine if they are already eligible for mortgage assistance through FHASecure, FHA’s existing refinancing program. They can obtain information through either of the following options:

1. Contact a local, HUD-approved housing counseling agency at;

2. Contact the HOPE NOW Alliance at 1-888-995-HOPE

Sustainable, Affordability Homeownership

Hope for Homeowners maintains FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

• Their mortgage must have originated on or before January 1, 2008;

• Their mortgage debt-to-income must be at least 31 percent;

• They cannot afford their current loan;

• They did not intentionally miss mortgage payments; and

• They do not own second homes.

Features of FHA-insured loans under the new program include:

• 30-year, fixed rate mortgage;

• Maximum 90 percent loan-to-value ratio;

• No prepayment penalties;

• $550,440 maximum mortgage amount;

• Extinguishment of any subordinate liens; and

• New home appraisals from FHA-approved appraisers.

HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.

Voluntary Lender Participation

FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure’s recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.

Market Stability and Liquidity

By continuing to slow the rate of foreclosures, this program will support FHA’s existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.


FHA will insure up to $300 billion in new loans. Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.

Program Timeline

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.

Information from Direct link here

Got high credit scores but can’t get a loan.

Friday, August 1st, 2008

approved. The reason for this is because lending is altogether a different market now. If you are trying to get a house, you definitely better have good credit, but that’s not all. Lenders are going back to what was called the plain old vanilla loans. In other words there is not much creative financing anymore. Here are some examples.

Stated loans
Stated loans have been loans designed for individuals that are self employed and could not show much income. In a lot of cases self employed people write off as much as they can on there income tax returns. So this type of loan was invented for them. Well IRS is trying to get rid of these loans. I am sure you can imagine why.

No Doc Loans
This type of loan was for the excellent credit borrower. With this loan you did not document anything, no income or work history. You just got a loan based on your excellent credit history. This loan is no longer being provided.

Limited doc loans

These types of loans are loans where you state you income without proof, but you verify your assets. This loan is still around but is difficult to get done, due to there not being a market for the loan. You need at least a 720 plus score to get one of these.

Conventional Loans
Most banks are requiring a 680 credit score just to get in the door with this type of financing. IN the past a 650 was considered a good credit score, but you better have at least a 680 middle credit score to get this type of financing. Plus you will need a minimum of 5% down.

FHA mortgage loans
These types of loans are typically not credit score driving. Now you have to have at least a 580 credit score to get most banks to underwrite your loan. We are starting to see a pattern where the credit score requirement is being raised to 620.

So you can see you may of thought you had good credit scores, but due to the bar being raised by the market, you might have problems especially if you financing needs to be creative.

The Housing Crisis Makes High Credit Scores Imperative

Friday, August 1st, 2008

If your credit score is sagging, the sad truth is you probably won’t get a mortgage loan this year, or in the near future.

Lenders are running scared these days, facing huge losses as one in 171 households fell into foreclosure during the second quarter of this year. That’s up 121% from last year – a whopping 739,714 homes in all. And that’s just for the period from April through June of 2008.

And, while the President just signed a bill authorizing the Treasury department to rescue Fannie Mae and Freddie Mac, the original lenders will be taking a hit. The new legislation is aimed at refinancing loans that are in trouble, and giving Fannie Mae and Freddie Mac Federal insurance against future losses, but will require the original lenders to reduce the principal on those loans.

The outcome of this legislation remains to be seen, but taxpayers have a right to be outraged. This law retains the hybrid nature of the mortgage finance giants, which are private companies with publicly traded stock, but which now have an explicit guarantee of help from the government — an arrangement that critics say privatizes the profits but socializes the risk and any losses.

Many believe that the current crisis is the result of aggressive loan programs. When lenders qualified new homeowners based on deceptively low introductory rates, it was a recipe for failure. Some ethical mortgage lenders refused to take part, while others counted their commission checks and laughed all the way to the bank.

As those rates jumped from 1.99% – or even 0.99% – to 6 or 7or even 8 percent, payments doubled, or even tripled. Meanwhile, wages did not.

Add in the current fuel prices, and it’s no wonder that sub-prime borrowers are losing their homes – and no wonder that lenders have suddenly realized that giving credit to people who can’t pay isn’t such a good idea.

What all this means to you – aside from the fact that the national debt level has just been increased by $800 Billion – is that your credit score is more important than ever. If you plan to get a mortgage loan any time in the near future, your best plan is start working to raise that FICO score to the highest possible level.

Step one is to get your free credit report, right here at Read it carefully so you know your starting point, and then get to work on making it as good as it can be.

How to Buy a Home When Your Credit Report is Negative

Friday, August 1st, 2008

Obviously, you won’t be able to walk into your local mortgage company office and get a loan unless your credit score is exceptional and your verifiable income shows that you can comfortably make the payments.

Gone are the days of “sub-prime” mortgages, and gone are the days of “stated income” for borrowers with high credit scores. Gone are the offers of “zero down” loans and creative financing options that allowed sellers to carry back a note for part of your down payment.

Lenders are being darned careful right now.

So what can you do if you want to begin building equity in a home – but your credit score is marginal and available funds for a down payment are scarce?

You can look for lease to own properties, and seller-financed homes.

Borrowers aren’t the only ones affected by this crisis – homeowners who need to sell are also in a bind, because the pool of buyers who will qualify for loans is getting smaller and smaller as lenders tighten their requirements.

Thus, those who can will begin entertaining the idea of seller financing and lease to own arrangements.

This could be good news for prospective homeowners, but it could also mean that home ownership will cost more. Traditionally, seller financing comes with a higher interest rate than those we’ve seen in the past few years. That means you’ll get less house for the same payment. Also, wary sellers might want a larger down payment than you are able to make.

These sellers will also want to see your credit report, but will likely be a little more flexible than mortgage lenders.

That leaves “rent to own” or “lease-purchase” arrangements. Under these situations, you won’t be on title, so won’t get the tax benefits of home ownership until the purchase is completed. Still, you’ll be locked into a purchase price, and if inflation continues, that could be a good thing.

Also, these sellers won’t be as fussy about your credit score, because they know that if you default, they’ll get the house back immediately rather than having to go through the long and expensive process of foreclosure.

But do be careful. Many “rent to own” properties are owned by companies seeking to take advantage of the current crisis, and their contracts are strict. For instance, they may require you to get a loan and cash them out within a set time frame. If you can’t do it, you’re out of the house and all payments made toward the down payment are kept as “liquidated damages.”

Making regular on-time payments to these companies will help raise your credit score, and the extra you pay will force you to build a down payment, so a lease purchase could be to your benefit.

Just be sure to read the fine print – all of the fine print.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.