WE DO NOT REPAIR CREDIT AND ARE NOT IN THE CREDIT
REPAIR BUSINESS.
CREDIT
GUIDELINES
CREDIT
Scoring
There are
“3” credit
reporting
agencies (Experian
, Equifax
and
TransUnion). Each offers its own
variation of the score. They all
tell the same story but are reported with different names.
The Bank will use the middle
score. The scoring system is
based on credit data obtained from millions of credit users.
It determines patterns and predicts how an applicant will perform on the
repayment of a loan.
1.
Credit
Scores
range from 350 to 875. If the
applicant has scored below 620, the system has determined that the odds of a
future delinquency is 10 to 1 (in other words…a good chance), however, if the
score is above 800, the odds are 1000 to 1 that the applicant would perform
poorly on a loan.
2.
A score of 620 or less could be an “automatic” FNMA
/FHLMC
denial.
3.
Scores are based on “5” factors.
35% = Late payments, collections, charge offs, judgments, bankruptcies.
30% = Outstanding debt (max out the credit
cards).
15% = Length of credit
(how
long accounts have been open).
10% = Type of Credit
(revolving
{credit
cards}
vs. finance companies)
* Finance companies (Beneficial, Avco) will impact more negatively than
department store credit
cards. Finance companies lend
to people who need money fast The
interest is very high because
this type of customer is more of a risk.
** If revolving credit
is
negative, scoring will be harder on
revolving than finance companies.
10% = Inquiries or NEW credit
4.
How to use your credit.
a.
Scores reflect credit
payment
patterns over time with most emphasis being placed on recent
information.
b. To improve
scores
, borrowers should pay bills on time.
c.
Delinquent
and Collections will have a major
negative impact on the score.
d. Pay down the
balance of accounts, but do not
necessarily close the accounts.
A
good rule of thumb would be to pay down the debt to 30% of the maximum credit
limit and
then
make the minimum monthly payments. Example:
$1000 limit, pay it down to $300 and
make
the minimum payment per the monthly bill.
e.
Paying off revolving debt before installment (car loan, student loan)
will have a more
significant impact toward raising the score.
f. Moving
balances from one card to another to save interest will negatively impact the
score.
g. Borrowers
should run their credit
at
least once per year.
h.
Buying
a home? A credit
report
should be run at least 90 days before
starting the process.
i. Any derogatory
credit
should
be addressed to the 3 credit reporting agencies (Experian
, Trans
j. In the case of
a Bankruptcy, accounts may still appear on the credit
as
charge-off and collections,
sending copies of the BK discharge papers and a letter to the credit
reporting
agencies could
increase the credit
score
into the acceptable range.
Charge-Off
or Collection Accounts”:
A
charge-off or collection account on a credit report means that account has been
charged off and probably with a collection agency.
This means you have to contact the collection agency to settle the
account. Also, you may want to
make a compromise offer, meaning, instead of paying off the entire balance you
should offer less. The creditor (or
collection agency) may accept your offer and save you “hundreds” or even
thousands of dollars. Once this is
done, notify the creditor (not the credit reporting bureau).
Give your name, address and social security number.
Ask the creditor to verify that this account has been satisfied and to
forward you a letter stating such.
Accounts
that do not belong to you.
Notify the creditor.
Give your name, address and social security number.
Explain to the creditor that this is not your debt and to match up your
information with what is listed on the derogatory account.
If it is determined that the account is NOT yours, you must ask the
creditor to send you a letter stating such.
If it’s determined that the account does belong to you…The
easy answer is pay these accounts off and get a letter of satisfaction.
Lastly,
notify ALL 3 credit bureaus. Send a
certified letter with an explanation of why you are writing them.
Include a COPY (not original) of the letters your received.
Ask the Credit Bureau to REMOVE the derogatory item(s) from your report.
If the account does belong to you and you have satisfied it, ask them to update
their records to reflect a paid/satisfied account.
The credit bureau’s have 30 days to check into the matter and issue a
result.
For your
convenience, I have included the contact information for all three bureaus
below.
Equifax:
Experian:
Trans
Please
contact me as soon as you have completed the above.
I look forward to helping you purchase a home.
I
have assisted over 4000 customers in the past 25 years experience and hold a
personal Banker’s license.
Dan
Palumbo, Licensed Mortgage Banker
Office:
(732) 797-0117
Cell:
(732) 674-0066
Email:
dpalumbo@alliedhomenet.com