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How it works
Your Credit Worthiness
The lender looks at three major areas:
- Your income.
- Your debt payments--Car payment, furniture...
- Your credit worthiness--FICO scores.
Know & Manage Your Scores
Your credit scores form the foundation of your ability to get a
home loan. The higher your FICO scores the lower your rate and
loan origination fees. A FICO score above 680 is considered a
low risk. No matter what your scores, a lender can be found.
Knowing your scores and managing them can save you $1000's over
the life of you loan. It's not uncommon for you to improve
your scores substantially by reviewing your credit report and clean
up any inaccuracies. You may not have a problem. We
often find people are more critical about themselves than their
creditors. But if you've been turned down and you can't
imagine why, then it's time to dive in and fix it. This could
take a couple of weeks or month. You can fix it but first you
need to know what's wrong and it's on the credit report produced by
one of the major credit companies.
There are three major credit collect companies: Equifax, Experian,
and TransUnion. Each have online products where you can
retrieve your scores and credit reports. Keep in mind that
your creditors (the people you owe or have owed money to over the
years) will most likely only report to one of these companies and
they do NOT share date with each other. This means that one
company may have something of concern on it that another does not
have. It's also possible that a falsely reported problem will
appear at one but not the other company.
Fixing Problems
So what can you do and how much will it cost? If you don't
think there is a issue, just apply for the loan. You can ask
for you scores and we can tell you if the loan package (interest
rate and fee) are telling you that there is a problem. If
there is a issue, there are three steps to this process:
- Find out what's on your report for each of the Big 3.
- Fix any problems via disputes and follow-up with creditors on
your report.
- Monitor your report.
There are two major products that provide you with the tools
you'll need:
- 3in1 Report--You'll only need one of these because they
combine the reports of all three companies.
- A Monitoring Service--This service provides you with alerts to
changes in your report. Typically, they only monitor their
own data (one of the three).**
A 3in1 Report is combined report from all three company's data.
If you suspect something is wrong or you just have to know, this
will show you what the lender is looking at. Lenders look at
all three before making a commitment.
Keep in mind that there are a number of conditions that allow you
to receive a free credit report, but you'll have to invest some time
and wait for the report. If you've been turned down for a
loan, you can get a free report from the company who provide the
lender the report. You have many rights under the law and this
is one of them. Go to their websites for details on your
rights.
Often one or more of these companies will run a free trial period
of 30 days on their monitor service. Check the details of the
offer (see the links below) as it may allow you to get your FICO
score and credit history free. Remember, these offers are
usually made available with only the information from the offering
company's data, one report not the other three.
Because fraud and human error can effect your scores and cost you
money, we recommend that you signup for a monitoring service (as low
as $3/month recently) that will alert you of any changes to your
report. Typically, the service allows you to view your report
and scores online.
What if you've had a problem in the past, like a major medical
issue, and you think your credit is bad? Start by getting the
facts (a combined 3in1 Report). You can fix the inaccuracies
and start rebuilding. Certain lending programs may not look at
the score, only the recent credit history. Additionally, some
lenders will consider letters of explanation. If you have a
strong Realtor, like Robin's Team, they will guide you to the right
lender with the best rates and lowest fees.
Since all lenders look to the Big Three to determine you
worthiness, Robin's Team has affiliated* with them to keep in touch
with the latest developments. The links below will take you
directly to their websites.
One note of caution, be careful with who you trust with your
personal financial information. A free offer to check your
credit effect your credit scores. We recommend that you use
one of the Big 3 because you can trust them, as they are the source,
and, if you have a problem with their information, you are their
client, they work for you and should do everything they can to help
you. |
