Does Paying Your Bill On Time Equals Good Credit?

Pay The Account In Full

Consumer thinks that their credit scores are rated higher if the consumer pays their account off from the creditor. The creditor should love to see a customer that pays on time in good faith. Wrong answer! The average consumer doesn't understand how credit is rated within the FICO algorithm system. First, the lender wants the consumer to have bad credit scores because it gives the lender the opportunity to make more money off of the consumer. A lender charges a higher interest rate for bad credit scores and it is legal under the government laws. As soon as a consumer pays off an account, the credit score drops. Now, is something wrong with that picture.

Transferring 0% Interest Rate Credit Card

The customer opens their mail to receive a credit card that guarantee a "Zero Interest Rate for a year". The banks decide to help the customer by sending a credit card to trap the customer into more debt as they make more money off the customer. The banks are so smart as they keep us in debt by letting the customer thinks that they are helping them. The customer pays their account on time and has never been late. The lender decides to do the customer a favor by sending a "zero interest rate for a year".  The customer thinks that this is a great deal to save money and to pay off the credit card. "WRONG ANSWER" The customer has been set up by the lender. RIGHT ANSWER. "DON'T FALL FOR IT"  Everything the lender does is profit for them. They know that the customer is not going to pay off a $10,000 balance on a credit card within a year. The lender charges the customer a transfer fee and gives the customer a "Zero Interest Rate for a year." Now the credit card is at "Zero Interest Rate" before the regular interest rate changes after a year. After the balance has been transfer, the customer closes the other account. The truth is the credit score takes a large hit on points for paying off the account and the customer has lost more points for transferring the balance to the new account at the maximum credit limit.

Credit Score Below 600

All Applicants with credit scores below 600 may still have the opportunity to purchase an affordable home. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase an applicant's credit scores. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com

 

We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com

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Should I Pay-Off A Charge-Off?

A charge-off, R-9, is an account reported to the credit bureau that the creditor has written off as a loss. The government provides the business with an opportunity to write off for their loss when a customer doesn't pay. The customer is still responsible for paying the unpaid balance on a charge-off.  The charge-off remains on the credit report for seven and half years from last date of activity. It depends on how long the charge-off has been on the credit report that affect the credit scores.

 Timing

Most people credit report takes a sever hit on their credit score for a charge-off reported on their credit report. Each month the credit scores drop from a late payment. If the account balance is more than $1,000, the lender may request the account to be paid under a FHA loan.  If the customer has an old account on their credit report, the scores have been calculated on the old debt. Paying off a credit account to obtain a mortgage may drop the credit score immediately. If a buyer has a credit score of 620, the buyer should pay off the account at the closing table. The credit score will take a drastic hit for paying off an account before final approval.

Resolve the Problem

The customer should negotiate with the creditor to pay off the account. Some time the collection agent is annoyingly rude to a customer who is trying to negotiate an account. All agreements should be put in writing before sending a cashier check.

1. Never give a collection agency your personal checking account. They could draw the rest of the money out of your account.

2. Never pay a collection agency until they send in writing the amount to be paid.
3. Request the creditor to delete the account based on pay-for-deletion.

Under the Fair Collection Act, the customer has Federal and State Rights to protect them.  The collection agency can't violate a customer rights as they collect their money. If a customer's right has been violated, the collection agency may be suited for the violations.

Consequent of Late Payments

Every late payment drops the customer's credit scores.The late payment stays on the credit report for seven and half years from the last date of activity.

Credit Score Below 600

All Applicants with credit scores below 600 may still have the opportunity to purchase an affordable home. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase an applicant's credit scores. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com

 

We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com

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Home For Sale-Qualify up to $15,000 in Down Payment Assistance

Neighborhood Lift Program

First-Time Homebuyer may qualify to purchase this home under the Neighborhood Lift Program. The program is based on median household income for the county. The down payment assistance funds may be forgiven if the buyer stays in the home for five years. This home is a gem for a First-time Homebuyer to purchase.

For Sale-$128,900 
Jacksonville, Florida

Stucco Front in a nice neighborhood

3 bedrooms/2 baths

Double car garage

Upgraded Masterbath Room and Guest Bathroom with new fixtures

Upgraded Kitchen with granite countertop and fixtures - new microwave hood range

Wooden flooring in the living room and dining room

Screen-in Patio with tile flooring

Wooden deck-As IS

Fence Backyard

well maintain landscape with sprinkle system

The Neighborhood Lift Program requires all First-Time Homebuyers to have at least a 640 credit score.

Credit Score Below 600

All Applicants with credit scores below 600 may still have the opportunity to purchase an affordable home. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase an applicant's credit scores. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com

 

We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com

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How To Qualify For A FHA Loan?-Down Payment Assistance

The First-Time Home Buyer may qualify up to $15,000 to buy a home at the approved cities that offer the Neighborhood Lift Program. The program is based on an applicant's household income. The participating lenders must be approved under the Neighborhood Lift Program for the down payment assistance program. The requirement for the program is the applicant must contribute 3.5% of the sale price of their funds into the program. The down payment assistance funds will be forgiven if the applicant owns the home for at least five years. The applicant must provide the following documents for a mortgage application:

1. Two years of 1040

2. 30 days pay stubs

3. Three months of bank statements

4. Application Fee (appraisal and credit report)

5. Gift letter from a relative, if needed

6. Self-employed - two years of profit and loss-Schedule C from1040
7. Explanation for any derogatory accounts on the credit report

All documents are verify before the applicant receives a final approval from the lender. The applicant employer will receive a verification of employment and the bank will send a verification of deposits for funds. The applicant's credit accounts will be verify on the credit report. If a charge-off is less than $1,000 and at least 24 months old from the last date of activity, the lender will not require the applicant to pay off the accounts. 

Compensation Factors

To qualify for a FHA loan, the applicant must have a front-in-ratio of 29% and back-in-ratio of 41%. If the applicant's ratio exceed the guidelines, the lender may use compensating factors. The applicant may be approved by the lender based on rental history, reserve funds in the bank and job stability. If the applicant rent is higher than the mortgage payment, the underwriter may approve the mortgage loan. The requirement for a FHA loan is a credit score of at least 620 and the Neighborhood Lift Program may require a credit score of at least 640.

No Credit

The applicant may still qualify for a mortgage loan even if the applicant doesn't t have any credit.  The lender may use alternative credit to qualify an applicant for a mortgage loan as follows:

1. utility account

2. car insurance account

3. rental history

4. rent to own account

Credit Score Below 600

All Applicants with credit scores below 600 may still have the opportunity to purchase an affordable home. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase an applicant's credit scores. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com

 

We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com

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How to Qualify for a Loan Modification-HAMP

President Obama passed the HAMP, Home Affordable Mortgage Program, to help homeowners to lower their mortgage payment. This program was implemented to keep homeowners in their home at an affordable mortgage payment for people who wanted to stay in their homes.  Every homeowner should contact their lender to apply for a reduction in their mortgage payment. The frustration started when homeowners were denied their loan modification. Some homeowners were denied several times for a loan modification. As homeowners began to fear losing their home because the homeowner lost their income, it made a simple program harder for people to qualify.

Reasons for Denial

A homeowner may be denied the loan modification under the HAMP, Home Affordable Mortgage Program, because the way the paperwork was submitted. If the homeowner didn't complete their financial paperwork correctly, the lender may deny the loan.

 The reasons loan modification are denied as follows:

                                                   1.  Homeowner doesn't make enough money
                                                   2.  Monthly payment 31% or less of the gross monthly income
                                                   3.  Debt coverage ratio exceed 1.20
                                                   4.  Not Owner-occupied
                                                   5.  Missing documents in the submitted package
                                                   6.  Current unpaid principal balance exceed $729,750
                      

Do not move out of your home -The home must be Owner-Occupied

The homeowner will be disqualified for the loan modification

Qualify for Hardship

The lender requirement is to write a hardship letter to explain the need for a reduction in the mortgage payment. A hardship letter should be only one page long explaining to the lender the request for a payment reduction. All homeowners are required to sign an Affidavit of Hardship.  The hardship letter must include these circumstances as follows:
           1. Loss of Income Or Unemployment
           2. Decline In Self-Employment Business
           2. Reduce Hours On The Job
           3. Unexpected Medical Expenses-Chronic Illness, Disability, Taking Care of Elderly Relatives
           4. Lack of Cash Reserve-not greater than $5,000 or three month of house payments
           5. Natural Disaster - Unexpect High Property Tax
          
A debt coverage ratio is less than 1.20 of the annual net income and annual debt expenses.  The calculation is based on the annual net income divide by the annual expenses. If the debt coverage ratio is higher than 1.20, the homeowner may not qualify for the loan modification. The disposable income is the same term as net income when the negotiator tell the homeowner that they do not have enough of disposable income.

Approval 

The lender reviews all the financial documents submitted by the homeowner and decides to approve or deny the request for the loan modification.  The homeowner that is approved receives a reduction in their interest rate and may receive a deferment or forgiven on their back payments. The lenders are not obligated to defer the back payment or to forgive the back payment. The forgiveness on late payments is based on the negative equity in the home only. Homeowner must be persistence in contacting the lender weekly to receive an approval.

Don't take a no for an answer from the lender. Ask the negotiator how did you arrived at that decision. Request the lender to send you the paperwork on why the loan modification was denied. If you don't understand, keep asking the negotiator to explain it. Make sure you understand the debt to ratio before you turn in a car. Request in writing from the lender when you turn in a vehicle, voluntary repossession, that you will receive an approval for the loan modification. You have the rights to fight for the loan modification approval. If you are denied, you may re-submit the paperwork again.

Increase Credit Score

Late payments on a mortgage may affect the homeowner's credit scores during a hardship circumstances. After the homeowner receives an approval for the loan modification, it is time to start rebuilding the credit. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase a homeowner's credit scores after a loan modification. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com
 
We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com
               

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