Category Archives: Credit

Need Some Simple Basics On Credit ?

When I get clients looking that are looking to get a home loan usually they are eager to not qualify for one of the first time home buyer loans available, they just want to get qualified. One of the first questions that I have to ask anyone is “do you know how your credit is” ? Whether you want to buy Santa Maria property or a you are looking to refinance your home, many times the stumbling block is the credit.   This blog post will be mainly concerned on a few simple things to be aware of regarding your credit such as. What is Credit? What is on a Credit Report? What affects your Credit?  Just an FYI this is not gonna have every answer but should be something of a starting point for you. Out side of that if you have any questions on either buying a home or getting a home loan feel free to ask.   I will post updates on credit and how to boost in later posts as to keep this from being to lengthy.

What is Credit? If you have a credit card or have ever borrowed money, you were given Credit, it can be from a friend or even from the local little store on the corner.  Credit is basically you using someone else’s money to pay for things now and paying them back later.  It also means that you agree to certain terms to repay this money that you have borrowed, usually with interest, whether it be to a company or to a person.  A loan or credit should be considered a legal obligation, meaning that there could be legal consequences for failure to pay this money back.  This is where people have either used or abused their credit to the point that the person (creditor) ends up having to take you to court if you cannot pay that money you borrowed back.   Problem with today is we live off of credit you cannot turn your head without someone telling you gotta have this or that.  So we end up borrowing money for the car, and even money for the Vacation.  So in reality you are still paying for your vacation even a year later.

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How do you know if you have good credit?  There are times that people believe that have good credit without knowing what their credit situation or what their credit score is.  I cannot tell you how many times, someone was in shock to find out what their actual credit score was.   Its not always the clients fault their can be misinformation on the credit report such as someone else’s information on your credit report.  Other times its old accounts that are in collections that that the client may have forgotten about. The best way to find out what your credit to just get a Credit Report. A Credit Report is a record or a history of how you have paid your credit card debt, installment loans, and other debts, like utilities, doctor bills, insurance bills, etc.  You can go to www.annualcreditreport.com and get a free report once a year to find out what is showing on your credit.  Only problem is that they do not show your scores they charge you 7.95 last I looked for your scores.   Your scores are what you need to know not just the what is reporting on your credit. That is basically like having only some of the ingredients to a recipe.

Within a Credit Report there are three reporting agencies.  Their names are: Equifax, Transunion and Experian. These reporting agencies do not share information with each other and they do not grant or deny credit. They simply report information as it is supplied to them by your creditors. The creditors can report to one of these agencies or to all three, It just depends.  THIS IS VERY IMPORTANT to understand!!!!   Most people have had their credit checked when buying a car or furniture or getting a cell phone.  WHEN BUYING A HOME A CREDIT CHECK IS DONE ON ALL 3 BUREAUS.   What this does is catch what may not be reporting on one of the bureaus so your credit score can be completely different when you bought that car.  I have had people come in thinking they have a 680 for example and instead they really only have a 620.  When it comes to mortgages we use the Middle Score so Experian can have a 680 , Trans Union can have a 610 and Equifax a 620.  So the lender will settle on a 620.

credit reportThere are several types of information that are included in all Credit Reports.

  1. Identifying Information: your name, current and previous addresses, telephone number, Social Security number, date of birth and current and previous employers. This information comes from credit applications you have filled out when you applied for credit.
  2. Credit Scores: a number from each credit agency (Equifax, Transunion and Experian) based on a secret computer model that grades your credit history.
  3. Credit Information: This contains specific information about your credit cards, and other loans. This information includes the date opened, credit limit or loan amount, balance, and monthly payment. The report also shows your payment history during the past several years and the names of anyone else responsible for paying the account, such as a spouse or a so-signer. It also shows late payments and accounts turned over to collection agencies.
  4. Public Record Information: bankruptcy records, foreclosures, tax liens for unpaid taxes, monetary court judgments (such as lawsuits), and, in some states, overdue child support. This information comes from federal, state, and local government public records.
  5. Inquiries: the names of those who obtained a copy of your credit report and how often you have applied for credit in the past two years.
  6. OFAC Compliance: due to the Patriot Act, your information will be checked against the federal lists of potential terrorists, I have never seen an alert as to whether someone is a terrorist or not.

As you can tell there is enough information on your credit report to basically become you online.  Something to seriously keep in mind all that is needed to basically run your credit and steal your identity and become you on paper or virtually on line.   Is your name, your DOB and social.   its not always a best idea to put your DOB on social networks for example since that is just one piece of the puzzle make them work for it and find it.

Simple tips to boost your scores

1) Don’t make minimum payments on y0ur credit cards make a little extra it registers if you are just making minimum payments.

2) Don’t max your cards out, if you do not need it don’t buy it pretty simple don’t have money in the bank to go on vacation then don’t go.  Once you get over 50% of your credit limit you start to loose serious points.

3) Don’t apply every time at the check out so you can save 10%.  Seriously its not worth it all it does is encourage spending and cost you points on your credit score.

4) Just pay on time.

Next blog more tips on boosting scores, what to keep in mind when getting a home loan etc. what lenders look for.

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What Information Comes On A Credit Report?

Ever wonder what is on your credit report? If you are thinking of taking out a loan, checking account, etc. Prepare yourself by knowing what a credit report is and some simple tips to keeping a great credit score.

A credit report is a file of gathered information of an individuals or business credit history. There could be 3 different credit bureaus that provide information on your borrowing history. By borrowing history, I mean what type and your payment behavior. Lenders use this information to decide what you qualify for as well as extension and on what terms. Complex formulas are used to get your 3 digit credit score which is used to rank people from poor to excellent. Excellent being 750 and up and poor being 619 and below. In between is good, fair, and uncertain. It would be wise to stay above 678, which is in the fair range.

If you have never seen a credit report, it provides lenders with all your personal identification information. This includes: You full name, spouses name, address, social security number, date of birth, as well as your employment history. The three different credit bureaus are Experian, Equifax, and Transunion. This record also includes inquiries, which are all the credit requests you have applied for and who have asked for your credit report. Public records and collection records are things like bankruptcy, foreclosures, and tax liens, known as adverse claims. Basically, records reflecting your credit history, obligations, any claims against you, and payment patterns.

What is a credit score and how can I bring my score up? This is the question many people wonder. To understand what is all included in a credit score, try to picture it as a pie graph. 35% is consisted of your payment history. 30% is money you owe. 15% is the length of your credit history. 10% is new credit, and 10% is type credit. Then they use a very complex math formula resulting in your three digit credit score. Most people cannot read these special formulas that are used to get a credit report.

Last things you should known about credit reports is how to improve your credit score! The most affective way to raising your score is to contribute 35% of income to your credit score. This is the quickest way to improve a credit score. Most of the real world cannot afford to do that so here are other ways:

  • Be sure to pay your bills on time. It is crucial that you make your payments on time. In the past, if you have had any late or missed payments, you need to continue to pay your monthly contribution, as well as late fee’s. These kinds of fees are not easily fixed and can stay on your report for up to 7 years. Payment deficiency claims will make it harder for you in the future to get finances from potential lenders.
  • Frequently check your credit report so you are always aware of your score and see if there is any recent improvement.   One the most common things that occur in today’s world Identity Theft.  It is not uncommon to find that you owe money to accounts that you never opened.  As well as common names that get mixed up can end up each others accounts.
  • Don’t open any credit cards you don’t need. The reality is if you open too many accounts the credit bureaus take that as having the ability rack up your debt and dropping score.  Most people get in trouble at the check out stand with the 10% off your purchase.  The smart thing to do is pass on that 10% because you will be paying much more in interest.  Especially scores go down due to having too many open accounts. Be aware that closing an account does not make it go away.

No credit?

Poor credit is better then no credit. Start building your credit by opening credit accounts as soon as you can. Maintain your credit responsibly to obtain a high credit score.  You can start with credit with secured card or simple furniture account and grow you credit as you go.  But keeping that credit is borrowing money that you do have to pay back with interest.

Poor credit is better then no credit. Start building your credit by opening credit accounts as soon as you can. Maintain your credit responsibly to obtain a high credit score. You can start with credit with secured card or simple furniture account and grow you credit as you go. But keeping that credit is borrowing money that you do have to pay back with interest.

For A FREE List Of Foreclosures & Pre Foreclosures On The Central Coast Click HERE

If you have any questions about buying a Santa Maria home for sale in the Santa Maria Real Estate market or any properties on the Central Coastand need to get a loan in Santa Maria, CA or any where in the state of so I California not just on the Central Coast, so I can do California home loans, and first time home buyer loans, as well as refinance home loans and just plain simple mortgage loans. So please contact me by sending me an email at: GenePerez@GMSLoans.net

I do also service all the nearby communities and other markets such as the Santa Ynez real estate market, Nipomo Real estate market, Arroyo Grande real estate market, Grover Beach Real Estate Market, and all other surrounding areas regarding the homes on the Central Coast.

my goal is to provide you with resources you need. I can also help in getting the financing for your home. If you have any suggestions or questions in how I can provide more or better

information please let me know. I have been helping my clients for the last 15 years on the Central Coast, Gene Perez – 805-448-7101 , DRE 01321588

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Important Disclaimer: Questions and answers provided on this website and by Gene Perez is to be considered general information, and is not intended to substitute for informed professional financial, tax, legal, investment, accounting, or other professional advice.

Gene Perez is Licensed Real Estate Broker for Valley Hills Realty and a mortgage broker for Greater Mortgage Solutions.

This blog and its content is copyright of Gene Perez 2010. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following: you may print or download to a local hard disk extracts for your personal and non-commercial use only. You may copy the content to individual third parties for their personal use, but only if you acknowledge Gene Perez as the source of the material You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system without obtaining Gene Perez’s




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Banks Screw Customers Credit Scores

Bank Errors Cause Damage to Credit, Distress to Homeowners

by Marian Wang ProPublica, Jan. 6, 2011, 9:10 a.m.

We’ve pointed out cases in which banks’ miscommunication and disorganization have caused mistaken foreclosures [1], but as several recent [2] reports [3] have noted, that’s not the only way in which bank mistakes have affected homeowners.

Some consumers have been surprised to see damage to their credit score after requesting information from the banks.

One Nevada homeowner told [4] financial blogger Barry Ritholz that after he asked Bank of America about who owned his mortgage, he suffered a drop in his credit score [2] even though he’d never missed a payment on his home. Though some advocates expressed concern that it could be a case of bank retaliation, a BofA spokesman told the Huffington Post that it may have mistakenly coded its report [2] to credit bureaus to reflect a homeowner dispute:

Certain wording used in the letters brought to the bank’s attention may have been interpreted in some cases as raising a possible dispute. The bank is taking steps to clarify the handling of these requests, and when and if a dispute coding should be placed on the account,” the spokesman said. “In any case, once a possible dispute has been researched and the findings result in the removal of the dispute coding, it should no longer be reflected in the customer’s credit profile. Bank of America will review files that may have been impacted and make any necessary corrections in credit reporting.


In another reported case, one Connecticut couple saw their credit score destroyed after they asked Bank of America about refinancing and were mistakenly placed [5] in the government’s loan modification program, according to Connecticut Watchdog.


They had never been late on a mortgage payment, but because the bank had erroneously put them in a trial modification, it reported an “AC” code to credit bureaus—a code that indicates the couple was making partial payments. Bank of America apologized for the mistake.

“What happens I think is some lenders pull reports periodically, and they see that AC code, and then they go adjust the credit lines [even if borrowers are current on their payments],” said Norm Magnuson, spokesman for the Consumer Data Industry Association, a trade association for credit bureaus. “It’s a complicated topic and it’s caused confusion certainly among consumers but also among some lenders.”

Magnuson told me that the industry has guidelines about credit reporting data, including when banks should use the AC code and when they should use a newer code that has no effect on credit scores. But those guidelines aren’t binding for lenders and servicers, and as we’ve noted [6], credit scores can take a hit when information is reported incorrectly.

The Connecticut case is one recent example, but it isn’t the first time [7] that Bank of America has made this particular mistake. The Minneapolis Star-Tribune reported in August that the bank signed up a Minnesota couple—also current on their mortgage—for a loan modification that they didn’t apply for. The mistake caused their credit score to drop 150 points. It was restored [8] after the couple filed complaints with their state’s attorney general and federal banking regulators.

Something to keep in mind is that State Laws vary on consumer protection regarding their credit some states can exceed that of Federal so consult your local state laws as to what you can do to remedy your situation if you happen to be the victim of your bank’s errors you should also know your federal rights as well as a consumer just Click here.

 

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New Credit Scores For Home Loans

With many of the things going affecting new and potential homeowners that are trying to learn how to buy a home, one of the many hurdles is having credit to qualify for the home loan, here is an article on some of the changes taking place.

 

By Jeffery Marino • Dec 16th, 2010 • Category: real estate newsflash

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In a delayed knee-jerk reaction to the mortgage meltdown and sub-prime lending crisis of 2008, lenders offering access to Federal Housing Administration (FHA) -insured loans are tightening their standards above and beyond those required by the federal agency.

The FHA instituted minimum Fair Isaac Corporation (FICO) scores for the first time in October of 2010. According to the FHA, borrowers shopping for conforming loans must have a minimum FICO score of 500 while those who have a score of 580 or higher are eligible for the maximum financing benefits available. [For more information on FHA home loan regulations, see the July 2010 first tuesday article, The true costs of a default-insured mortgage.]

However, the minimums required by the FHA are much lower than those required by the underwriting standards of most lenders today. Many lenders set a minimum FICO score of 620 for their FHA-insured loans as early as 2009. While 620 remained the magic number for the Big Three (Bank of America, Wells Fargo and JPMorgan Chase) for quite some time, now the major players on the mortgage-backed bond (MBB) market will not purchase an FHA loan from the originator unless the borrower has a minimum FICO score of 640.

Considering there are roughly 6.3 million people in the United States with a credit score between 620 and 640, the 20-point increase in minimum FICO scores will exclude as much as 15% of FHA borrowers. Given the continuing decline in consumer credit scores resulting from ongoing foreclosures and a still-high unemployment rate, these increased restrictions will affect those hit hardest by the recession.

first tuesday take: Once again, the California real estate market, and the health of the economy as a whole, are being held hostage by Wall Street. Note that this is not the government, not FHA. The MBB market is apparently still reeling from the near-death blow it sustained in 2008 and the present onslaught of litigation over their having to now buy back the bad loans they previously originated and sold, which is not helping them make a loan to the prospective homebuyer with a less-than-average credit score.


We are entering a phase in this economic recovery where wage-earners are slowly beginning to accrue wealth once again – at least in California, with the exception of temporary and part-time employees (government employees). After cutting their debt-to-income (DTI) ratio in half via strategic default or bankruptcy filing, the individual who was previously held prisoner by their underwater home is now newly solvent and looking for a good value on the real estate market. [For more information on strategic default and homeowner solvency, see the September 2010 first tuesday article, The LTV tipping point: when negative equity owners strategically default.]

Unfortunately, blame for the reckless and short-sighted lending practices during the Millennium Boom is being artfully sloughed-off by the Big Three and conveniently attributed to consumer irresponsibility. Rather than restructuring underwriting methods in such a way that would create sustainable and logical lending practices that are appropriate to the current economic milieu, the Big Three are falling back on their trusty (read: outdated and over-emphasized) tool: the FICO score. [For more information on the overemphasis on FICO scores in determining creditworthiness, see the June 2010 first tuesday article, The FICO score delusion.]

Under the guise of increased lender responsibility and consumer protection, the big banks are penalizing recently foreclosed-on homeowners by raising the arbitrary bar for creditworthiness. Certainly the FICO score can be a useful tool for determining a borrower’s ability to pay back a loan. But with a growing contingent of prospective homebuyers who have increasing purchasing power and dwindling credit scores, the overemphasis on the credit score simply does not work in our recovering economy.

In spite of their proven allegiance to the banking industry (read: massive bailouts), Congress has clearly rebuffed lender arguments that the consumer was responsible for the mortgage crisis.

After a century’s worth of efforts and many defeats at the hands of big business, Congress successfully instituted the Consumer Protection Agency this year. To drive home the point they are no longer willing to let public policy be controlled by private banks, Congress granted the Federal Reserve Bank (the Fed) control of regulating rogue mortgage lenders who still seem unwilling to bend to the government’s regulatory will.

Hopefully, as a new paradigm focused on responsible lending and sustainable homeownership takes shape, real estate agents, brokers and lenders will follow suit.

Re: “Home Buying Gets Tougher as Lenders Restrict FHA Loans” from Bloomberg News

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Copyright © 2010 by the first tuesday Journal Online – firsttuesdayjournal.com;
P.O. Box 20069, Riverside, CA 92516

Copyright © 2010 by first tuesday Realty Publications, Inc.  first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

 

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Getting A Divorce and Credit Scores

Central Coast Homes For Sale

Homeowners getting a divorce is nothing in any where and that holds true for the Santa Maria real estate market, and a divorce does affect your mortgage home loan among many other things.

When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

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When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

Central Coast Homes For Sale

Call me directly for a free consultation.

If you have any questions about buying a Santa Maria home for sale in the Santa Maria Real Estate market or any properties on the Central Coastand need to get a loan in Santa Maria, CA or any where in the state of so I California not just on the Central Coast, so I can do California home loans, and first time home buyer loans, as well as refinance home loans and just plain simple mortgage loans.  So please contact me by sending me an email at: GenePerez@GMSLoans.net

I do also service all the nearby communities and other markets such as the Santa Ynez real estate market, Nipomo Real estate market, Arroyo Grande real estate market, Grover Beach Real Estate Market, and all other surrounding areas regarding the homes on the Central Coast.

my goal is to provide you with resources you need. I can also help in getting the financing for your home.  If you have any suggestions or questions in how I can provide more or better

information please let me know.  I have been helping my clients for the last 15 years  on the Central Coast, Gene Perez – 805-448-7101 , DRE 01321588

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Important Disclaimer: Questions and answers provided on this website and by Gene Perez is to be considered general information, and is not intended to substitute for informed professional financial, tax, legal, investment, accounting, or other professional advice.

Gene Perez is Licensed Real Estate Broker  for Valley Hills Realty and a mortgage broker for Greater Mortgage Solutions.

This blog and its content is copyright of Gene Perez 2010. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following:  you may print or download to a local hard disk extracts for your personal and non-commercial use only. You may copy the content to individual third parties for their personal use, but only if you acknowledge Gene Perez as the source of the material You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system without obtaining Gene Perez’s

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