Jan
21

Credit Tips for Buying House Now

By

Raleigh.  Overwhelmed with credit repair info?  What should you do?  Hire a credit repair company?  Can I provide tips on what to do?  Yes, here’s key info.

Tina and Fred want a house nowThey’re planning on hiring a credit repair company.  Should they?  The short answer:  No.  They improved Fred’s cousin’s FICO score, so why not?

1.  Credit repair is not fast.

2.  Credit repair is not normally permanent.

See my blog on this topic and see why credit repair can block access to a mortgage.  The first thing you should do, even before you check your credit score, is ask yourself this question:

Have you had a 30-day late
on your mortgage/rent in past 12 months?

A yes answer means no mortgage.  You need to wait until your answer is no.  Tina wants to know why since they are current now.  The answer is threefold:

1.  Current Debt – When Tina and Fred made their account current, they removed it from the current debt category.

2.  Credit History – Their 30-late stays in your credit history for 7 years even though it’s paid.

3.  Sensitivity – Mortgage lenders are very sensitive to late payments related to housing.  Other late payments can often be explained if the score is high enough.

Can it be deleted?  Accurate information cannot be deleted.  As a side note, don’t pay off overdue accounts over 18 months old.  Collections are a different animal.  Sometimes they can be removed from your credit report.  Here’s how:

1.  Agree to pay off collection in full.

2.  Insist on signed agreement to remove collection from your credit history BEFORE you make payment.

CAUTION:  Don’t pay off collection without this agreement signed and in hand.  Even a partial payment will hurt your FICO score.  Talk to your loan officer.

Two rules of thumb for dealing with revolving accounts (normally credit cards):

1.  Closing – Don’t close unused accounts.

2.  Open – Don’t open new accounts.

Both these actions will hurt your FICO credit score in the short run.  So don’t open or close accounts if you want to buy now.

Tina and Fred want to buy now.  They’re FICO score doesn’t quite meet the minimum needed.  Is there a quick way of raising their score?  Yes, reduce their balances on their revolving/credit card accounts.  Unlike late payments, FICO does not track past balances.  The lower the better, but less than 30% of credit card limit is a good target.

Kathy Godin, Branch Manager & Award-Winning Loan Officer
(919) 789-9888
Where people, not computer robots, answer the phone.
Proudly Serving All of North Carolina


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