FHA loan Basics

April 18th, 2008

FHA loans are loans that are insured by (HUD) Housing Urban and Development. FHA loans have been around since the 1930’s right after the “Great Depression.” This was when 4 out of 10 households owned a home. (FHA) Federal Housing Administration is the savior for our current market just like it was back during the roaring 30’s.With FHA loans especially during a credit crunch like we are currently are in, you can rest assure banks are willing to be more lenient to approve credit challenged borrowers with FHA financing. The reason is FHA loans are insured by HUD, and if the borrower looses the home HUD will pay a claim to lender for the loss. FHA is the largest single insurer of loans in the world.

FHA Advantages.

• Lower interest rates, typically interest rates are lower on FHA loans with the banks since they are government insured loans
• Only requires minimum investment from borrower of 3% down payment, which can be eliminated by Down Payment Assistance. So essential you can get a 100% financing with FHA loans. Note: Requires Seller participation
• If you have less than perfect credit you can typically can get a loan with FHA, they usually like to see 12 to 24 months clean credit report history. You can even get a loan while in chapter 13 bankruptcy.
• No Credit Score Requirement
• Recent loan limits increased-varies from state to state; go here to find out. For example you can buy a home in the state of Texas with FHA up to $271,050. Depending on if your state is a high cost area; obviously this loan limit would be higher.
• Will allow alternate lines of credit if not good history is on credit report.
Example:
1. Letter from any utility company stating you have been on-time with your payment history for that last 12 months.
2. 12 month payment history from car insurance company, cell phone company and even daycare will work.

If you are currently in the market to buy or maybe you feel like you need credit repair, what ever your direction is, getting a FHA loan is not as hard as you think. FHA gets people approved that may not get approved with other loan types. The first step is to examine where you are at with a lender and get the ball rolling. IN this current market some lenders are requiring you to either have a 580 credit score or higher. They will also allow no credit score but your interest rate is higher than current market rates. This is going on even though FHA has no credit score requirement; this is due to bad performance of loans below the credit score benchmark of 580.

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How Debt after a Divorce will affect your Credit Score

April 15th, 2008

We all know how important it is to have as high a Credit Score these days. Especially since your credit score is no longer a secret anymore. Divorce is all too common in today’s society, and when Divorce Decrees are drawn up, the attorney forgets to make sure debts that are joint accounts are only in the person’s name that is awarded that debt per the decree. Typically what the divorce decree will say is whom is awarded what debt. Here is how this is a problem.

How debts after divorce will affect you:
Let’s assume while you were married you and your significant other had accumulated some debt that are joint accounts. This means that both of your social security numbers are attached to the obligations and its being reported to all 3 credit bureaus. So once day you both decide to get a divorce and the attorney works up a Divorce Decree like they normally do, which of course is the wrong way. Both of you go on your marry way, and the other party decided to be late on a obligation that is reporting in your name still. Guess what happens to your credit score. Your score just dropped 150 points. This is a common problem, and of course now it’s your problem even though you have a debt that was awarded to the other party per decree. Let’s assume it’s a house, and your ex decides to let the house go to foreclosure. Now you cannot buy a home for 3 years because you have a foreclosure on your credit report. So basically a divorce decree is a agreement between divorcing couples, it does not separate liabilities.

What you need to do so you’re Credit Score is not affected:
Divorcing couples should never rely on the other spouse to pay bills that were awarded to them per Decree. This is a disaster waiting to happen. These type of issues need to be tackled up front so there is no issues once the divorce is final. If you have already made this huge mistake, my suggestion would be to go back to court and get these debts out of your name. If there is a house involved, I would recommend getting the house refinanced out your name or sold depending on the situation. Obviously if the spouse is behind on the mortgage they would not be able to refinance due to the credit situation. In a situation where the ex spouse is behind on the mortgage and its affecting your credit report, I would recommend going back to court and taking over the mortgage payment along with having the house awarded back to you. The solution to all of this is simple; make sure you don’t have debts in your name that gets awarded to ex spouse. Don’t let your ex spouse ruin your credit. If you have already made the mistake, I would recommend pulling a recent copy of your credit report with credit scores to make sure there is no damage done.

Author: Mike Clover

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6 Tips to protect against ID Theft.

April 13th, 2008

9 million people a year are victims of id theft, learn some tips on how to prevent this from happening to you.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secured credit cards, student credit cards , mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

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Tips for Avoiding Foreclosure

April 9th, 2008

Are you currently having trouble making your mortgage payment? Has your mortgage company sent you notice or called you?

* Contact your lender immediately
* Contact a HUD-approved Housing Counseling Agency
* Don’t ignore the letters and calls from your lender
* TTY (800) 877-8339
* Toll FREE (800) 569-4287

If you are not able to make your mortgage payment:
1. Contact your lender as soon as you realize there is a problem.
Lenders don’t want your house back. They have options to help families that are going through tough financial times.
2. Don’t ignore that there is a problem.
The further you get behind the hard it is to reinstate the loan, and you will more likely loose your house.
3. Undertand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov/foreclosure/index.cfm
4. Open and respond to all your mail from lender.
The first notices you receive will offer good information about foreclosure prevention. The mail that will come later will give notice of pending legal action. Your failure to open your mail will not be a excuse in foreclosure court.
5. Know your mortgage rights.
Find your mortgage documents so you can find out what your options are with your currently lender if you can’t make your payment. Learn about the foreclosure laws and timeframes for your state by contacting the State Government Housing Office. Every states laws and timeframe are different.
6. Prioritize your spending
After healthcare, keeping your house is your first priority. Review your finances and see where you can start cutting back on spending. Look for luxury expenses like cable, memberships, and entertainment you can eliminate.
7. Contact a HUD-approved housing counselor

The U.S. Department of Housing and Urban Development (HUD) funds free or low cost housing counseling nationwide. Housing counselors can help you understand your options and the law; also they will organize your finances and represent you in the negotiations with your current lender if you need assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339

8. Avoid foreclosure preventions companies
You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (typically two or three month’s mortgage payment) for information and services your lender or a HUD approved housing counselor will provide you for FREE if you contact them.

9. Use your assets
Do you have assets, jewelry, a whole life insurance policy that you could sell to help re-instate your loan? Can anyone in your household get a extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they will demonstrate to your lender that you are willing to make personal sacrifices to keep your home.
10. Don’t lose your house to foreclosure recovery scams !
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title of your property and becoming a renter in your own home ! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.
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Different Chapters of Bankruptcy

April 9th, 2008

In Title 11 of the United States Code (the Federal Bankruptcy Code), there are four types of bankruptcy filings:

• Chapter 13 – Adjustment of Debts of an individual with Regular Income
• Chapter 11 – Reorganization
• Chapter 7 – Liquidation
• Chapter 12 – Adjustment of Debts of a Family Farmer with Regular Annual Income

The filing of your bankruptcy is determined by a person’s financial situation. Currently the most common filing is Chapter 7.

A debtor that is filing Chapter 7 is basically wiping the slate clean and starting over. When filing Chapter 7 you are assigned an administrator or a Trustee to maneuver the sale of the debtor’s assets. This does not mean necessarily everything you own is sold. Federal and state laws allow certain exemptions, meaning that the debtor might get to keep some property, such as his or her primary residence or some personal items. Once a debtor’s assets are liquidated, the trustee pays certain creditors with the monies that were raised. Most of the financial obligations are forgiven or discharged. Once you have filed Chapter 7 you cannot file a Chapter 7 again for 7 years, and the debts that were not filed in the previous Chapter 7 cannot be discharged in the next filing.

There are certain debts that a debtor will receive not forgiveness for. They are alimony, child support, taxes and student loans. If a lot of your debts fall into this category you might be better off filing Chapter 13.

Chapter 13 and 12 are basically the same filing, except that Chapter 12 is for Family Farmers and Chapter 13 is for individuals. If you have a steady income and less than $269,250 in unsecured debt and less than $807,750 in secured debt, you can file Chapter 13. Once you file Chapter 13 a trustee is assigned to you. The Trustee and the debtor develop a proposal for a repayment plan. The court decides whether to accept or alter the payment plan or dictate another repayment plan. Once a plan is agreed upon, it can take anywhere from 3 to 5 years to repay.

Maybe you are wondering why someone would file Chapter 12 or 13 over Chapter 7. There are a few reasons for this:

• In most Chapter 12 and 13 cases- the debtor only pays back a portion of what they owe. Sometimes it’s as little as 30 to 50 cents on the dollar.
• Under Chapter 12 and 13 filings, debtors don’t have to liquidate their assets. – they actually get to keep everything, not just items that meet the legal exemption.

Chapter 11 is very similar to Chapter 13. The main difference is that there is no limit regarding the amount of money owed by debtor. Originally this filing was only for large corporations, individuals can file Chapter 11 as well.

Filing a bankruptcy cannot be taken lightly, it will affect your credit for years. The decision to file should be made under the counsel of a financial planner or a legal representative.

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SNL Skit – Don’t buy stuff you can’t afford !!

April 7th, 2008

A great SNL skit featuring Steve Martin that really simplifies the truth of the matter with people who are in debt and don’t know how to get out. Not only is it funny but it is true!
I thought this was a great video, due to the current times out there.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secure credit cards, student credit cards , and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Posted in bad credit, bankruptcy, debt | 1 Comment »

Survive the Current Credit Crunch

April 4th, 2008

It’s not hard to see that our country is in turmoil currently. You can’t turn on TV without hearing about people loosing there jobs, gas prices being high, recession, foreclosures, and banks going out of business. I figured with this article I would give some tips to protect you and your family’s credit report. This is probably one of most important times in our history of credit, to make sure you are saving and your credit score is secure.

Personal Finance
A economic downturn could affect your personal savings, investments, and even your job. There are precautionary measures you can take to survive such events.
• Cut back on expenses that are unnecessary, such as cable TV, eating out, frivolous spending, etc……..
• Save 6 months worth of salary in savings account.
• Reduce your Home owner’s insurance policy, shop around for better premiums.
• Reduce insurance costs on your cars.
• Bargain shop for food, clothes, etc….

These are some savings tips that will help you financially with our current economic downturn that we are going through.

Refinance your 15 yr Mortgage
Over the years a 15 yr mortgage might of made since, but of course you could of paid off your mortgage just as quick on a 30 yr mortgage without the pressure of a 15 yr amortized payment.

Equity in your Home
If you currently live in a home and you have equity you might consider tapping into some of the equity for cash on hand. It would be much harder to get a home equity loan if you lost your job.

Rebuilding your credit
If you have had some bumps and bruises, such as a bankruptcy, foreclosure, late payments or collections you don’t have to suffer for the next 7 to 10 yrs. Immediately after such credit issues start rebuilding your credit with secured credit cards. Make sure you have good rental history and save as much money as possible. You really need at least 3 lines of credit reporting, so if you can get 3 secured credit cards I would recommend applying for them.

Tax Refund
If you are receiving a tax refund this year make sure you put that towards a debt with high interest charges or into a interest bearing emergency account.

Housing
If you are having issues making your mortgage payment or concerned about a foreclosing on your home here are some number to contact that may be able to assist you. Also make sure you communicate with your current lender as well.
• Home Ownership Preservation – 888-995-HOPE
• Housing and Urban and Development – (888) 569-4287

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I have no credit scores – How do I establish credit scores?

April 1st, 2008

If you have no credit scores due to being new to the credit arena or you have just been a cash person all your life there is hope for you. There is one sure way to get the credit score calculated in about 4 to 5 months. In this article I will talk about how to establish good credit scores for a healthy credit report.

Secured Credit Cards

A lot of people don’t know this but secured credit cards are the quickest way to establish credit. The reason for this is you give the bank money to secure credit that reports to all 3 credit bureaus. Typically you need about two cards to get the ball rolling. After 4 to 5 months of reporting “bam” you have credit scores. Typically creditors like to see 3 lines of credit reporting for a minimum of 12 months with good payment history. With this type of activity on your credit report, reporting to Experian, TransUnion and Equifax is one of the recipes for success. You will not achieve credit scores if you can not get someone to extend credit to you. That is the secret behind applying for a secured credit card to start the road to establishing this wonderful three digit life altering number.

Here is an example of a mix of credit that Fair Isaacs scoring model uses to determine your risk which ultimately determines your scores.

Buy a house
Once you have about 12 months of rental history, with paying your utilities, and your secured credit cards on-time you will be able to buy a house. Of course you need to qualify for a loan with your current income. Getting a house is not as hard as one might think. If you have a two year work history and have 3 lines of credit like I mentioned earlier you can buy a home. Typically the type of loan you will qualify for is FHA. This is a great first time buyers program. Buying a house will help you get a mix of credit reporting on your credit report. This is around 10% of your overall score. When creditors extend credit to you they like to see that you own a home as opposed to renting.

Keep Credit Card Balances low.
Once you have got secured credit cards reporting on your credit report make sure you keep the balances below 30% of a your secure credit amount.
Example:
Secured Amount: $300.00
Balance at 30%: $90.00

This will keep your scores where they need to be once you establish them. After about 6 to 12 months you can request a limit increase. This is another sure way to increase your credit scores.

Get a car Loan.
Getting a car is actually easier than getting just about any other credit. There are all types of lenders out there willing to loan you money on a car loan. You might try getting a loan for a car to establish credit as well. Most car lenders report the note to all 3 credit bureaus. This is another way to get your scores rolling as well. Make sure it’s not some small tote the note establishment that does not report to the bureaus. Make sure the loan is reported to all 3 credit bureaus.

Conclusion: If you follow this advice you will be well in your way to establishing your credit scores. If you are unsure if you have scores get a copy of your free credit reporttoday.

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How long does Collections stay on Credit Report?

March 29th, 2008

If you have collections on your credit report, you can count on most of them staying on there for minimum of 7 years from the original collection date. Sometimes you will have the collections sold to different collection companies. This could be a challenge trying to get the original collection date, but the creditor currently reporting the collection must report this information correctly. Typically the creditor reports the wrong original collection date, so you have to dispute it. They must comply with this request under the (FCRA) Fair Credit Reporting Act.

Here is how long items stay on your credit report from original collection date:
1. Medical collections – 7yrs
2. Charge Offs – 7yrs
3. Late payments – 7 yrs
4. Judgments – 7 yrs
5. Tax Liens – until you pay off
6. Repossessions – 7yrs
7. Chapter 7 Bankruptcies – 10 yrs
8. Chapter 13 Bankruptcies – 7yrs
9. Collections – 7 yrs
10. Inquiries – 2 yrs
11. Foreclosure – 7 yrs

I am sure you have heard you can get obligations that you owe removed from your credit report. I will tell you and so will the FTC that you cannot get obligations removed from your credit report even though you owe the debt. The only items you can get removed are items that are not correct, for instance.

  • Debt that is not yours
  • Maybe you and your father have the same name, and report is skewed
  • Duplicate items
  • Items over expiration date
  • Inaccurate reporting, like slow pays.

Maybe you don’t know what is being reported on your credit report. Its time you find out, so if there is inaccurate information you will know. Current statistics show that 1 out of 4 credit reports have incorrect information on it that would cause a denial of some type of loan.


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Fix Credit Report Errors: Learn How

March 29th, 2008

This is a step by step guide that will give you the tools to fix inaccurate information on your credit report. First you need to check when the information being reported is set to expire. Next use our customizable dispute letter, and sent it to the Credit Bureaus. It is really that simple.

Step 1: Look for incorrect information being reported about you:

Order a current copy of your credit report with scores from all 3 Bureaus online. Print your credit report and view it carefully. Make note of any information that is not correct. Determine when the information is set to expire. This guide will help you determine if and when the negative information on your credit report will expire.

Public Records:

a.Bankrupcties- Chapter 7 Bankruptcy will expire from your report after 10 years of file date. Chapter 13 will expire from your report after 7 years from file date.

b. Judgements- Court ordered decisions stay on your credit report for 7 years from file date. Example: child support, civil and small claims court.

c.Tax Liens- Tax liens stay on your credit report until you pay it off. Once you have paid the tax lien, it will stay on there 7 years from paid date. This applies to City, State, and Federal tax liens.

Charge –off – records- this record will show up on your credit after a creditor has wrote off the debt as a loss. This will remain on your file for 7 years.

Inquiries- Records of application for credit. These types of inquires usually stay on credit for a maximum of 2 years. Checking your credit online with credit sores does not damage your credit like these inquires do.

Closed Accounts- This information whether negative or good stays on your credit report for 7 years.

Collection Accounts- This record should expire after 7 years from the last 180 day late payment that led the account to collection to begin with. The expiration date is the same even if the collection is sold multiple times.

Foreclosure Records- Foreclosure and property deed-in-lieu records remain on credit for 7 years from foreclosure date.

Late Payments- Late payments stay on record for 7 years.

Repossession Records-Vehicle repossessions stay on you credit report for 7 years.

Use this expiration information to determine what should not be on your report. You should also check for information that is being reported on there that is not yours. Also make sure there is no information that are cross records either.

Step 2: Write Dispute Letter

Once you have determined what is not correct on your report, it is time to write you disputes to the Bureaus. You will need to send the letter to each of the credit bureaus via certified mail.

Example dispute letter:

Date

Your NameMailing AddressCity, State, Zip

Re: Disputing Inaccuracies on My Credit Report

Name of Credit Reporting Bureau Mailing Address City, State, Zip

Dear Sir or Madam:

I am writing for two (2) reasons:

1. To dispute certain information in my credit file; and

2. To have you investigate/re-investigate and remove inaccurate information from my Credit Report and prevent its re-insertion. The item(s) I dispute are encircled on the attached copy of the credit report and further identified by (identify the items by name of source, such as creditor or tax court, etc. and identify type of item, such as credit account, judgment, etc.)This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or whatever specific change you are requesting) to correct the information.(If you are enclosing documents such as copies of canceled checks, payment records, court documents, send copies only, you should always retain the originals — and use the following sentence.)

Enclosed are copies of the following documents supporting my position?

1.

2.

3.

Please reinvestigate this (these) matter(s) and (delete or correct) the disputed items within the time frame required by the Fair Credit Reporting Act (FCRA) and inform me in writing of the outcome. Thank you for your time and consideration in this matter.

Sincerely,________________________

(Signature)Your name

Step 3: File your dispute

Submitting your dispute by mail is the suggested way, but only Equifax and Transunion allows this kind of dispute. Experians requires all disputes to be submitted online.

Here is the 3 Credit Bureaus information.

Equifax

P.O Box 740256

Alanta, GA 30374-0241

Dispute online

Experian

Dispute online

TransUnion

2 Baldwin PlaceP.O. Box 2000

Chester, PA 19022

Dispute online

Step 4: Manage Results

The 3 Credit Bureaus have 30 days to investigate your dispute and update your credit report if the dispute is valid. Once they have investigated your concern, they will send you a letter stating what was updated on your credit report. If you were not able to get a inaccuracy fixed you will need to resubmit your dispute with new documentation.

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Disclaimer: This information has been compiled and provided by CreditScoreQuick.com 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.