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Posts tagged ‘FICO score’

‘Rapid rescoring’ can provide homebuyers a quick credit fix

Work with a trusted mortgage professional who utilizes “Rapid Rescoring” and ‘What-if’ simulator.  I work with both of these tools.  It’s what’s best for my clients.

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Many mortgage applicants have never heard of “rapid rescoring” or CreditXpert score simulations — in part because some lenders choose not to educate them.

That’s unfortunate, because anyone who’s looking for the most favorable interest rates and terms in 2018’s rising interest rate environment ought to know at least the basics about them — especially if their current score puts them near a break point between getting a better deal or qualifying for a loan altogether.

Here’s a quick primer. Say you spot one or more errors in your credit reports — maybe there’s an account you’ve paid off in full but it’s still being reported as open and delinquent, or perhaps there’s a collection-account issue you’ve settled with a creditor but it’s still reported as ongoing. Both are potentially significant negatives for your credit score, but if you have documentation, you can show they’re out of date.

What to do? You could begin the standard process of getting them corrected by asking the creditors involved to request the national credit bureaus to amend your files. But here’s the problem: You’re under contract to buy a house and you need the errors corrected immediately — or you risk not qualifying for the mortgage or interest rate you need.

Fixing the errors directly with the credit bureaus could take weeks. Enter rapid rescoring — a process that frequently can get the erroneous information corrected in as little as two to three days. It works like this: You provide the documentation about the accounts to your loan officer, then request a rapid rescore using the loan officer’s mortgage credit-report vendor. The vendor’s staff will then verify your documentation with the creditor(s) involved and provide the corrected information directly to the credit bureaus.

The updates should show up quickly on your credit files, allowing the vendor to supply a new and more accurate credit report to your lender along with a new — and typically higher — credit score.

Paul Wohkittel of CIS, a national credit-reporting company, says that although the improvements in scores vary with the severity of the erroneous credit-file information being corrected, he’s “seen scores that go up by 50 to 60 points,” saving applicants thousands of dollars in higher mortgage payments over time.

Terry Clemans, executive director of the National Consumer Reporting Association, a credit-industry trade group based in Roselle, calls rapid rescoring “a great tool anytime consumers find something in error but need to expedite the (correction) process.”

But rapid rescoring is not for everyone who seeks a quick score boost. For example, if the negative information depressing your score is accurate, it won’t help. Then there’s the expense. Rescoring can cost $30 or more per updated account per credit bureau. So if you’ve got multiple accounts to correct in all three major national bureaus, the total cost can be significant. Plus, there’s another wrinkle: You as a consumer are not permitted to pay directly for rescoring. Your lender is required to foot the bill, though that might find its way into your total loan fees at settlement.

The expense of rapid rescoring is why some lenders are reluctant to raise the subject with certain applicants. Paul Skeens, president of Colonial Mortgage Group in Waldorf, Md., said that “a lot of people who have problems on their credit reports simply don’t have a lot of money to spare.” But for those who can afford it, “it really does work.” One applicant who had a good income but a 680 FICO credit score — too low for the best available mortgage rate — zoomed to a much better 740 after a rapid rescoring, Skeens said.

There’s another valuable mortgage credit tool you should know about. If your score isn’t quite what you need but the information in your files is accurate, your lender should be able to obtain a “what if” simulation through its credit vendor. read more via http://www.chicagotribune.com/classified/realestate/ct-re-0128-kenneth-harney-20180122-story.html

 

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3 Ways to Boost Your Credit Score (and 3 Ways to Damage It)

When it comes to taking the next step in your life, one of the most important numbers could be your credit score. After all, it can stand in the way of some of the biggest purchases you may want to make, like a car or a house.

First the basics, five factors comprise your credit score

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Not all debt is the same and some  is considered ‘good’ according to Scott Smith, president of CreditRepair.com. “Any kinds of car loan, home loan…those things actually provide you great credit history when you pay them off on time and fill those debt obligations,” he said.

Even credit card debt isn’t “necessarily wrong” said the credit expert. But Smith warned “you don’t want to have more than 30% utilization on that (account) and you do want to pay it down as often as possible.”

Scott Smith gave his assessment on the three Do’s and Don’ts of improving your credit score.

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read the 3 DONT’s via http://finance.yahoo.com/news/3-do-s-and-don-ts-of-improving-your-credit-score-175614971.html#

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Interest rates are driven by various factors. Here is what you may not know…

There are a few other factors such as property type and occupancy status. But this is a good start to understanding how interest rates are determined.

If you’re like most people, you want to get the lowest interest rate that you can find on your mortgage loan. But how is your interest rate determined? That can be difficult to figure out for even the savviest of mortgage shoppers.

Your lender knows how your interest rate gets determined, and we think you should, too. That’s why we’ve created a new interactive tool that lets you explore the factors that affect your interest rate and see what rates you can expect.

Armed with information, you can have confident conversations with lenders and ask questions to make sure you get a good deal. Here are seven key factors that affect your interest rate that you should know:

1. Credit score

Your credit score is a number that lenders use to help predict how reliable you’ll be in paying off your loan. Your credit score is calculated from your credit report, which shows all your loans and credit cards and your payment history on each one. In general, if you have a higher credit score, you’ll be able to get a lower interest rate. You can use our tool to explore how your credit score impacts the rates available.

Before you start mortgage shopping, get your credit report. Check for errors, and make sure to get them fixed. Examine your debts, and see if there are any you can pay down to improve your score. Learn more about how to raise your score.

Credit scoring is complicated—in fact, you have many credit scores, not just one. You can learn more about how mortgage lenders evaluate your credit history and use credit scores.

It’s a good idea to try to get a sense of your credit score range before you start mortgage shopping. Once you have an idea of your credit score range, put it into our tool to get more accurate rates.

2. Home location

Many lenders have slightly different pricing depending on what state you live in, so to get the most accurate rates using our tool, you’ll need to put in your state. If you live in a rural area, you can use our tool to get a sense of rates for your situation, but you’ll want to shop around with local lenders as well. Making a loan in a rural area can be more complicated, so large lenders may not serve that area.

3. Home price and loan amount

Your home price minus your down payment is the amount you’ll have to borrow for your mortgage loan. Typically, you’ll pay a higher interest rate on that loan if you’re taking out a particularly small or particularly large loan.

If you’ve already started shopping for homes, you may have an idea of the price range of the home you hope to buy. If you’re just getting started, real estate websites can help you get a sense of typical prices in the neighborhoods you’re interested in.

4. Down payment

In general, a higher down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can put 20 percent or more down, do it—you’ll usually get a lower interest rate.

If you can’t afford 20 percent down, experiment to see how lower amounts affect your rate.

5. Loan term

The term of your loan is how long you have to repay the loan. In general, shorter term loans have lower interest rates and lower overall costs, but higher monthly payments. Learn more about your loan term, and then try out different choices with our tool to see how your term affects your rate and interest costs.

6. Interest rate type

Interest rates come in two basic types: fixed and adjustable. Fixed interest rates don’t change over time. Adjustable rates have an initial fixed period, after which they go up or down based on the market.

In general, you can get a lower initial interest rate with an adjustable-rate loan, but that rate might increase significantly later on. Learn more about interest rate types, and then use the tool to see how this choice affects interest rates.

7. Loan type

There are several broad categories of loans, known as conventional, FHA, and VA loans. Rates can be significantly different depending on what loan type you choose. You can learn more about the different loan types in our Owning a Home loan options guide.

Now you know

That’s it—know these seven factors and you’ll be well on your way to getting a great interest rate for your situation. And just remember:
•You don’t need to have all seven of these factors decided before experimenting in our tool.
•As you consider your budget and learn more about your options, come back often. The more you know, the more accurate the rates will be.
•As you start talking to lenders, compare their offers to the rates in the tool to see if you are getting a good deal.

Now go forth and find a great mortgage rate!

See more via http://www.consumerfinance.gov/blog/7-factors-that-determine-your-mortgage-interest-rate/?utm_source=newsletter&utm_medium=facebook&utm_campaign=01202015_oahlaunch

Change around the corner for credit scores

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How did the recession affect your spending habits? Soon, for better or worse, you might see your financial behavior reflected in your FICO score.

FICO, the data company that devised the credit-scoring formulas most often used by mortgage and auto lenders, credit card companies, etc., plans to release a new scoring model this summer that it promises will analyze credit risk more correctly.

FICO said the new model, the first major change in six years, is intended to address lenders’ concerns about credit score consistency across the three major credit bureaus.

A FICO spokesman told National Mortgage News that the new formula, called FICO Score9, will analyze post-recession data in terms of how a consumer’s spending and credit habits may have changed, compared with six years ago. Consumers whose scores were good pre-recession will score slightly better in the new version, he told the trade journal.

via Change around the corner for credit scores – chicagotribune.com.

How to Get a Mortgage With Bad Credit

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I found this article to be very helpful and realistic.  Major point is to start with your loan officer…

If you have a credit score that’s considered fair, poor or even bad, you may be assuming that qualifying for a mortgage is out of the question. While that’s true for some would-be borrowers who need to improve their finances as well as their credit, there are some mortgage options for homebuyers with less than perfect credit.

Your Credit Profile

Mortgage lenders rely heavily on your credit score to evaluate your qualifications for a home loan because your score indicates how you have handled credit in the past, which serves as a predictor of your future repayment pattern. According to Credit.com, excellent credit gets a score of 750 or above; good credit, 700-749; fair, 650-699; poor, 600-649; and bad credit is a score under 600.

Rather than guess at your credit profile, you need to request your free credit report and pay a small fee to get your credit score from http://www.annualcreditreport.com. Fix any errors and take steps to improve your score with improved financial behavior before applying for a mortgage loan. A lender can help you determine which steps will boost your credit score fastest (to continue reading, click on link)

via How to Get a Mortgage With Bad Credit – Finance – realtor.com.