Archive for March, 2009

2009 Mortgage Credit Score Requirement Update

Sunday, March 29th, 2009

With the mortgage credit score benchmark changing monthly, it’s really tough to keep up with what the requirements actually are. As the market changes like Texas weather, you can only assume you have a high enough credit score to even get a mortgage loan. This market has been extremely turbulent with all the new mortgage qualifying guideline. I wanted to give the current credit score requirements as of March 29, 2009 for FHA and Conventional loans.

FHA credit score Requirements- Most lenders are requiring that you have a 620 credit score to get a FHA mortgage loan. This benchmark has recently changed from a middle credit score of 580 to a 620 with most lenders. There might be circumstances out there where a lender will allow a loan below this benchmark if they don’t plan on selling there loans on the secondary market. I do know that you will find most lenders will require a 620 score to get you financed. I know this rule will be applied to all brokers, and not to all banks. So you might check around just to see if there is a bank allowing a credit score below 620 and what there guidelines are. Historically brokers have always been able to get loans done that banks cannot do. It looks like the tide might be changing a bit in this arena.

Conventional Loan credit score Requirements – Currently with most lenders you have to put down between 5 and 10%. You must also have a minimum of a 700 middle credit score to get financed. This is largely due to (Mortgage Insurance) M.I. companies clamping down on credit criteria to insure a loan. However there are some banks that get special privileges that other don’t. For example, some banks can now get you a Conventional loan with a credit score as low as 680 with 10% down. These M.I. companies have chosen to allow this with certain qualified banks. You will find that most lenders will require a minimum 700 credit score to get financed, and don’t forget you must qualify as well.

VA and USDA credit score requirements – These two loans are really the only loans left that are 100% financing still. They both are government insured loans and you must qualify for each program. Not everyone will qualify for either one of these government loans. The current market for these particular loans does require a middle credit score of 620. USDA has had this credit score requirement for quite some time now. So this is nothing new with this particular loan.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Who cares if I am Politically correct, your credit stinks!!!

Saturday, March 28th, 2009

What is going on in our country? We don’t want to offend anyone, or say anything that might hurt someone’s feelings. Wow, so I guess if you are wrong that is ok. I BEG to DIFFER. I think we need to spread the word that if you are wrong, then you are WRONG. I am not really concerned what everyone else thinks, the only person that really matters is what GOD thinks, not some politically correct person.

Let’s face the facts, when you are wrong about something it needs to be known. Whether it’s in regards to finance, political views, religion or just shop talk. There are right ways and wrong ways to doing things.

I wanted to take my real approach to views about what is really going on. I would like to call it the Back to Basics show. If you ever have a chance, listen to Mark Levin. This guy takes the correct approach to saving our Constitution, and telling the FACTS about what is really going on in our country.

Whether your credit stinks, or your political views are radical, I will tell you what is right.

Since my site is mainly about credit and finance, I will stick with the general content and topic of this article. If you currently are not RICH, your credit is more important than ever. I cannot imagine what your life will be like if you need a loan and cannot get one. With the lending institutions increasing credit score requirements and qualifications rules, you can count on your life being extremely tough with challenged credit. So the question is what do you do about it? Within my site I have all kinds of articles about what you need to do to manage your credit, or fix it. I get e-mails daily from people all around the U.S. thanking me for writing about the FACTS. You can go the and see that SELF Help credit repair is the recommendation by your own government. This should tell you something. There is no quick fix to getting your credit report cleaned up. Don’t fall prey to quick fix credit repair schemes. Use our site to help yourself out. I should know since I am a lender and help people out all the time that will listen. Search within our blog and find the article that fits your circumstances.

For once I am not going to be politically correct within my blog. So the point is, “If your credit stinks do something about it.” Don’t depend on some credit repair scam. This information provided today is for your own good. I don’t make any money by educating someone on how to repair their own credit report. I thought I would mention this. There are rules and steps you need to take in order to clean your mess up. Once these steps are understood teach them to your children. Help them; teach them to be responsible for their tomorrow.

In this country we have many freedoms. One of our freedoms is the pursuit of happiness. Now, how we get to this happiness is by what we feel is right and we seem to not follow good advice if the advice requires some effort. Repairing your credit requires effort on your part.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

I have good credit; I don’t need to get qualified to buy a home.

Thursday, March 26th, 2009

If I had a dollar for every time I have heard this from some potential home buyer I would be a millionaire. I am not sure where this ignorance comes from, but just because you think you have the credit to buy a home does not mean you will “QUALIFY.” It does not matter what anyone thinks, I do know that there is a proper process to buying a house. I wanted to educate the common public on how important it is to listen to a real estate professional that has a good reputation. I know you have probably heard about all the nightmares about how someone had a horrible experience while buying there home. This typically is the result of the wrong process. Here are the FACTS.

Get approved to buy- The first step before you look at homes, drive around, search the web, etc….. is to get with a lender and get pre-approved. It does not matter what you think or how you feel this is your FIRST step. If you don’t do this first and you fall prey to a realtor willing to drive you around to look at homes, you will have problems. The rules for lending have currently changed. Obviously with the new lending guidelines it makes only rational sense to see what you can qualify for, before you have a Realtor show you a bunch of homes you may not be able to buy. I never have understood why Realtors run buyers out to show them homes without getting them pre-approved first. Usually when a realtor does this, it is lack of experience and bad judgment on there part. So, before you look at homes, get pre-approved. This means have a lender run your credit report, and verify ALL documentation supporting what you have told that lender. If a lender does not ask for documentation supporting your income, and funds to close, that lender is not following the proper process to get someone pre-approved. A lender should not pre-qualify you, but pre-approve you. There is a difference. Getting pre-approved means the lender has verified what you have told them. Pre-qualified means the lender has pulled your credit report, but has not verified your documentation. This is where lots of issues will arise. Again, “Get Pre Approved…..

Get with a reputable Realtor- Once you have got pre-approved get with a seasoned real estate agent. Real Estate agents that are seasoned will know how to make your buying process smooth. A good Realtor will know your local market and how to find exactly what you are approved to buy. One of the biggest misconceptions out there is “I don’t want to pay real estate fees. Well guess what? You will pay them regardless, because all homes for sale are listed with a agent. Yes, there are some for sale by owners, and 99% of the time those homes are overpriced, because the owner is not educated enough to know his or her own market. So with this being said, you will need a Realtor to represent you.

I hope this article did not sound like I was shouting. I just see so many people not listening. I can only lead a horse to water, but I cannot make him drink.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

No Credit? Here’s a New Way to Build It

Wednesday, March 25th, 2009

Consumers with no credit history – and those who are trying to rebuild credit after experiencing financial difficulties – often find it nearly impossible to get that first loan or credit card to begin building a good credit score.

Unless you have a credit record to show that you’re a responsible debt payer, no one wants to give you credit. It gets even worse if you’ve got a past record of non-payment. And if you need to show responsible use of credit in order to get credit, it feels like you’re stuck between a rock and a hard place.

If you find yourself in this situation, you may feel very alone, but you’re not. It turns out that over 50 million Americans have little or no credit history. And millions more have a credit history that needs to be repaired.

The good news for you is that a company called Pay Rent Build Credit, Inc. (PRBC) is offering a solution. Called America’s Alternative Credit Bureau, they’ll help you build credit for bills you’ve already paid, even though those bills are typically not reported to traditional credit bureaus.

These are monthly expenses such as rent, telephone bills, insurance bills, cable and satellite TV bills, power bills, and even day care expenses. Typically, these are only reported to credit bureaus if your payments are late or in default.

For a small fee, PRBC, using information you supply, will verify your past payment of these accounts. Then, if you sign up through them for on-line bill pay, they’ll keep an ongoing record of payments.

Creditors with whom you’d like to do business can then request copies of your PRBC credit report - just the same way they request a credit report through any of the “Big 3″ Credit Bureaus. The difference is that you must first give permission.

Once you’ve shown a good record of payment of rent and 3 other bills for 12 months or more, a PRBC credit report can even help you qualify for a mortgage loan. In the meantime, it can help you get a credit card – or a better rate on a credit card, and can prove to a potential landlord or employer that you are a responsible consumer.

Often, consumers who have made a life-long habit of paying cash for every purchase are shocked and angered to find that they don’t qualify for a mortgage loan. They feel that they’re being penalized for responsible behavior – and they are. Mortgage companies, along with other credit issuers, want to see a track record of monthly payments. PRBC is helping those consumers prove that they are indeed credit worthy citizens.

Because the size of this market offers vast opportunities for profit, several other companies – including Fair Isssac – are either implementing or working on plans to implement some version of an alternative credit reporting service.

Author:Marte Cliff your resource for free credit reports, credit cards, loans, and ground breaking credit news

Credit Checks and Your FICO Scores

Tuesday, March 24th, 2009

You’ve been told many times that it isn’t smart to let a salesperson check your credit unless you’re ready to make a purchase. In fact, you may have been told that credit checks are so damaging to your score that you don’t even dare look at your own credit report.

That part isn’t true. You can check your own credit report as often as you like with no damage to your score. And you should – it’s one way that you can be alerted quickly if someone else is using your identity.

In addition, you don’t need to worry the checks that credit card companies make before they send you one of those “pre-approved” offers. Not that you’ll be receiving many of those in the near future – credit card companies are trying not to extend credit right now – not searching for new borrowers.

Those checks, which are really nothing more than unauthorized snooping, are not used in compiling your score. They, along with account reviews and inquiries from potential employers, are known as “soft” inquiries.

The inquiries that affect your FICO score are the “hard inquiries.” These are made when you apply for retail store credit, credit cards, auto loans, and mortgages. They affect your score because they show your positive intent to obtain credit.

The more inquiries, the more they’ll affect your score – except in one instance. The credit bureaus and FICO understand that people shop for the best deals, and they take that into consideration.

So if you’re shopping for a car and you visit 6 different dealerships within a 2 week time frame, all 6 inquires will count as one under the old scoring model. The new model extends that time frame even farther – to 45 days.

The same is true for mortgage loan inquiries.

Even better for shoppers – any inquiries younger than 30 days are completely ignored by the scores. This gives you more leeway to shop for the best mortgage or car loan without fear of lowering your score.

Credit inquiries stay on your credit report for 2 years, but the FICO scoring model only counts them during the first year.

If you’re thinking about a car or a house, check your own credit first and work to get it into the upper 700′s before you let any lender do a hard inquiry. And then, don’t get the inquiry until you feel certain you’re ready to go forward.

It would be a shame to knock yourself down if you’ve been working hard to get to that place in life where lenders offer you the lowest rates!

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Were You Offered a Bribe to Close Your Account?

Monday, March 23rd, 2009

Not too many months ago, most consumers’ mailboxes were filled on an almost daily basis with offers for new credit cards. Most of them were emblazoned with “You’re approved” in bright red letters across the front as an enticement to open the envelope and say “yes” to the opportunity.

Along with those offers were envelopes filled with cash advance checks from current card issuers. Some of them were already printed out in amounts of $3,000, $5,000, or even more. The message was clear: “Just sign the check and deposit – and go indulge your every whim!”

Often those messages came with enticements such as free gifts, reward programs, and interest-free trial periods. But that was last year.

Now, that deluge has slowed to a drip – and it only lands in selected citizen’s mailboxes.
Instead of seeking new card holders, credit card companies are closing unused accounts, slashing credit limits, and raising interest rates so high that most consumers can hardly wait to pay their debts and get out from under.

American Express, while also using those tactics, has taken an additional step: They’re offering significant “bribes” to current account holders to pay off their balance and close their accounts.

American Express isn’t revealing how many consumers received the letters offering them a $300 pre-paid credit card in exchange for paying off their accounts between March 1 and April 30.

Although other card issuers, such as Chase, offer similar (smaller) bribes to customers in default, American Express is targeting those customers who might go into default. One or more of the various scores kept on each of us has indicated that they’re a higher than average risk.

This is just one more step being taken by card issuers who are seeing near record numbers of defaults and charge-offs.

The result for consumers is anything but good. Low interest rates on both credit cards and mortgages require high credit scores. High credit scores rely on many factors – one of which is the ratio of debt to available credit. So every time a card issuer closes an account or reduces a credit line, the consumer’s credit score takes a hit.

This is a self-perpetuating cycle with no end in sight as yet. Hopefully the credit bureaus will begin taking notice and adjusting scores accordingly. However, there’s been no news of that happening.

One has to wonder – when the credit card companies “weed out” all those consumers who have been carrying balances and paying interest, they’ll be left with those who pay their balances in full each month. That will cost them money, so the next logical step will be to begin closing those accounts as well.

Then where will their income come from?

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Do Your Kids Understand Credit?

Sunday, March 22nd, 2009

Teaching your kids to understand and respect credit could be one of the most valuable lessons you can impart. People all around you are buried in debt – you may even be buried in debt. If you can keep your children from falling into the same trap, you’ll be doing them a great service.

You really need to start when they’re very young – with savings accounts, or even a box at home where they can save up money to buy something special. As they get a bit older and proficient at math, they should learn about checking accounts and how to track expenditures. They should also learn how to balance the bank account.

Learning those things early on will make them much less apt to go crazy with spending the first time they hold a piece of plastic with their own name embossed on the front.

If you didn’t start early, there’s no better time than now. They need to understand the basics before they have access to plastic money. That said, when the time is right, you have choices in how you’ll introduce him or her to the world of credit.

A simple way is to add your child’s name as an authorized user on your own card. As long as your credit is good, it will help your child to build credit as well. But that might not be the best choice.

If you add your child’s name to a card on which you carry a balance, the lesson may be lost. It’s better if the card your child uses is used for nothing but his or her expenses. That way you can both see and track purchases, and your child can see clearly how many dollars it costs when that balance isn’t paid in full each month. This is part of the lesson you want to teach.

If your teen has an “I can’t live without this item” and wants to charge it, you should first sit down together and go over the real cost. If the item is $100 and he or she can only pay $10 per month – show him how much extra he’ll pay in interest.

This is a good time to teach budgeting, so your child can see that if he runs up debt he’ll have that much less to spend next month.

You also need to establish some clear rules about how the card will be used. Will he buy his lunch every day with the card and then pay it off in full at the end of the month? Is the card for clothing, music, or entertainment? If so, who pays the bill? And what are the consequences for not making the payment – or not making it on time?

A second method is to help your child get his or her own card. You will probably have to co-sign, however. That means you will still be liable for the debt and your own credit will suffer if bills aren’t paid on time.

Both of these methods leave you open to “spoiling” the lessons. Because you won’t want a late payment on your credit report, you will probably jump in and bail out your child if he or she gets in a mess. And as we know, being rescued from our mistakes isn’t the way to learn lessons.

Stored-value cards are another option for helping kids learn how to handle money. These are actually pre-paid cards, so have no value in building a credit report. They’re convenient, because in most cases, your teen can have their paycheck deposited directly into the card.

Stored value cards are really the same thing as a checking account – except plastic.

Several banks are offering stored value cards, but they come with a big drawback: Almost every action – such as an enrollment, a reloading deposit or a balance inquiry – comes with a fee. There’s even a fee for inactivity if you don’t use the card for a few months.

It might be safer to set up a checking account. But if you choose that route, take the time to explain the consequences of writing a check for more than your available balance.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Dirty Tricks in Debt Collection

Friday, March 20th, 2009

What if you had financial troubles 15 or 20 years ago and finally took bankruptcy in order to get a fresh start? You were no doubt told that the debts discharged in that bankruptcy were gone forever – not collectable.

And even if you didn’t file bankruptcy, but merely quit paying a credit card - after 4 years the statute of limitations runs out and they can no longer legally collect from you.

That’s the truth, but the truth doesn’t stop some debt collectors from interfering in your life.

You see, those old files are hanging around in debt collectors’ offices. And every once in a while they look at them, and check your current credit report. If you’ve gotten back on your feet and your credit is looking pretty good, you become their target.

Why? Because they can see that you have money again. All they have to do is convince you that you must pay that old bill.

So how can they do that? First they file a lawsuit against you. Then, they hire a person to serve you who provides what is commonly known as “gutter service.” That means instead of actually serving you with the notice of suit, they toss the papers in the gutter. I don’t know how they get around the fact that you’re supposed to sign for receipt, but when did crooks worry about the legalities?

Now that you’ve “been served” with notice of the lawsuit, you have a set number of days in which to reply. When you don’t do that, the court will rule against you by default. So now there’s a judgment against you – and that shows up on your credit report. Then they either begin hounding you for it, or sit back and wait for you to rush to payment in order to get it off your credit report.

Pretty slick – and pretty crooked. But you still don’t have to pay it.

Should this happen to you, simply Fax and mail a certified letter to the collection agency letting them know that you aren’t going to pay, and don’t have to pay, and WHY you are not obligated to pay. Include proof that the debt was discharged in your bankruptcy, or that you have no made no payment or charges on the account for at least 4 years.

Whatever you do, don’t let them scare you into giving them any money. Even a single dollar paid on that debt will re-set the statute of limitations, and they can legally hound you for another 4 years.

Next, you need to dispute the claim with each of the credit bureaus – and they have forms for that. Once you file a dispute, they’ll investigate – and they’ll find that the debt is not owed. Then it will come off your credit report – as long as the proper time has passed. A bankruptcy stays on your credit report for 10 years, while other information remains for 7 years.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Tax Iien Credit Score Q & A

Thursday, March 19th, 2009

I have a state tax lien on my credit report. Once paid how quickly will this reflect in my score? Also, any idea roughly a tax lien reduces your score?

There is no set number with the credit scoring process for tax liens. Based on all the credit reports I have seen, usually any negative mark such as late payments, collections, public records etc can drive your credit score down 100 points or so. Typically when you pay off a collection or public record, such as judgements and tax liens you will see a credit score improvement of around 30 to 40 points. Results vary depending on your overall credit profile. How much good credit do you have ? What is your credit balance to limits ? How long have you had good standing payment hitory, etc………..

Mike Clover

Credit Card Protection – No Protection at All?

Thursday, March 19th, 2009

If you’re fearful of losing your job in this time of mass layoffs, you may be tempted to opt-in to a credit card protection offer from your card issuer. Before you do, keep in mind that these offers are just one more way for credit card issuers to part you from your money.

For one thing, these plans effectively increase your overall cost of credit by more than 100%. If you currently carry a balance on your credit card of say, $2,000, and you’re being charged 9.9% interest, you’re paying about $16.50 per month in interest. Now add a fee of 99 cents per month per $100 in credit. That’s 20 times 99 cents, or $19.80!

While some of the smaller card issuers charge “only” 50 cents per $100, the big players such as American Express, Discover, Bank of America, and JPMorgan Chase & Co. charge high fees.

So the first thing to consider is cost. The second is the contract itself. There is NO guarantee that if you need this coverage, it will be granted.

The advertising for these programs say that in the event of job loss or illness the program will suspend your account, stop interest accrual, waive payments and stop late fees for a certain time period.

What they don’t say is that you must have been employed for a certain time period before you sign up, that you won’t be covered unless you’re a full-time employee, and that the self-employed get no coverage at all (even if they’ve paid for the coverage).

Many have waiting periods and require proof that you’re receiving State unemployment benefits. And of course, if you quit for any reason – tough. That’s not covered.

Job loss from temporary disability carries some stiff requirements too. Some of these plans state (in the fine print) that “You must be physically unable to perform any work or service for wages, gain or profit.” So if you have a broken leg and can’t perform your job as a cement finisher – you’re not eligible because you could physically go to work as a typist.

If you’re off work due to illness, most card issuers require a monthly note from your doctor. Fail to send the note and the coverage disappears.

Blogger Josh Smith says that when he wrote about this on his blog, he was inundated with replies from people who had been denied coverage. Some even had their plans cancelled as soon as they tried to file a claim – even those who had been paying for years.

Keep in mind that this is not an insurance plan – so your state insurance regulator can be of no help if you feel you’ve been defrauded through denial of benefits you’ve paid for.

One last note – credit card companies are also trying to sell a plan that will pay off your balance if you die. This is not only expensive, but completely unnecessary unless you have a co-signer on your account or you have an estate large enough to go to probate.

While they will try to collect from family members, they have no legal right unless that family member was a co-owner of your account.

Author:Marte Cliff your resource for free credit reports, credit cards, loans, and ground breaking credit news

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.