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Discussions tagged with 'credit'
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One sure thing mortgage lenders can count on is they all run credit.
There are three major credit bureaus:
1. Experian
2. Equifax
3. Transunion
Finance companies, employers, vendors, and creditors may use one or more of the above credit report. Some may use one out of the three above. Others may average two credit scores from two credit bureaus. Others may use a tri-merger credit report which is the middle credit score. For example, a borrower may have the following:
1. Experian Score 540
2. Equifax Score: 640
3. Transunion 700
The middle credit score above is the Experian Credit Score of 640.
Mortgage brokers , correspondent lenders, Full-Eagle lenders normally run a tri-merger which mean they use a private credit monitoring agency (Credit Plus, CIC, Advantage, Xacturs). The credit monitoring service coordinates the administration of the tri-merger credit report which yields credit scores from each of the three credit bureaus. Each credit bureaus has its own credit score of the applicant. On the credit report, you will find the borrower’s name AKAs (also known as), curent and previous addresses, DOB, employment history for the past ten years, list of creditors, payment history, derogaory credit, type of credit, amount borrowed or credit limit on revolving accounts, date of last activity, hard credit inquiries in the past two years, credit disputes, collection accounts, charge off accounts, public records (bankruptcy. foreclosure, deed-in lieu of foreclosure, short-sale, tax liens, judgments and other public records).
NOTE: Just because a creditor is not listed on the credit report, does not mean the applicant is clear of the tradeline. All mortgage lenders will run a national third-party public records search. What this mean is public records not reporting on credit reports will get discovered by lenders. For example, if a shrewd credit repair consultant successfully removed a bankruptcy and/or a recent derogatory credit event), you can count on being discovered on the national third-party public records search.
Over 80% of mortgage loan applicants at Gustan Cho Associates are folks who coult not qualify at other mortgage companies. Statistics show 100% of all pre-approvals at Gustan Cho Associates close. The number one reason borrowers encounter stress during the mortgage process or a last-minute mortgage loan denial is due to the loan officer not properly qualifying borrowers prior to issuing a pre-approval. One of the largest factors the pre-approval is null and void is because the loan officer issues a pre-approval with not thoroughly reviewing line item per line iterm on the credit report. Here is a list on things to look for and ask the borrower in the mortgage qualification process prior to issuing a pre-approval letter:
1. Carefully look for credit disputes.
2. Borrowers cannot have any credit disputes on non-medical collections and no credit disputes on any derogatory credit tradelines.
3. Credit disputes is allowed on medical collections, non-medical collections with zero balance, and non-medical collection accounts with a total (sum of all collection account balance) of UNDER $1,000.
4. Lenders are allowed to allow credit disputes for derogatory credit tradelines that are two years old or older from the date of last activity.
Credit Scores, Credit Payment History, and Public Records on Credit Reports Determine Your Home Loan Eligibility, Mortgage Rates, and a Comprehensive Overview on The Applicant’s Ability To Repay The Mortgage Loan and The Borrower’s Ability on How Much House They Can Afford.
https://www.youtube.com/watch?v=tuDtVACDpHM
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This discussion was modified 2 months, 3 weeks ago by
Sapna Sharma.
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This discussion was modified 2 months, 3 weeks ago by Sapna Sharma.
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This discussion was modified 2 months, 1 week ago by Sapna Sharma.
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This discussion was modified 2 months, 3 weeks ago by
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Credit Play an important role in the mortgage process
Any new loan officer or veteran loan officer who has not been trained on the fundamentals and types of credit reports and analyzing credit reports may find this thread very helpful and hopefully avoid making avoidable mistakes.
Please start by reading this informative guide;
https://gustancho.com/credit-during-the-mortgage-process/
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This discussion was modified 2 months, 3 weeks ago by Gustan Cho.
gustancho.com
Credit During the Mortgage Process Made Simple
Credit during the mortgage process requires borrowers to meet minimum credit score. Lenders will look at payment history in the past 12 months.
View Last Reply: replied 2 months, 3 weeks ago
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This discussion was modified 2 months, 3 weeks ago by
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The link below is for our Basic Credit Bootcamp. This is a short, very basic overview of credit. It is a great refresher and has some great tips included throughout the video. ENJOY and we hope you find something of value! If you have any questions, please feel free to reach out
http://www.thecreditcouple.net/bootcamp
View Last Reply: replied 1 year, 8 months ago
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Veterans and Credit History Length: A Journey Through Time
Welcome to Day 15 of our dedicated series, where we continue to equip our veterans with the essential tools and knowledge for navigating the civilian credit landscape. Today, our focus is on the length of credit history and its impact on credit scores, offering insights into how veterans can optimize this facet of their financial story.
Understanding Credit History Length: The Timeline Matters
The length of your credit history, or the duration over which you’ve managed credit, accounts for roughly 15% of your FICO score. This considers the age of your oldest account, the age of your newest account, and the average age of all your accounts.
The Importance of Credit History Length for Veterans
A longer credit history can provide a clearer picture of your financial habits over time. For lenders, it offers a more extended view of how you’ve managed credit. For veterans transitioning from military to civilian life, understanding this aspect is crucial, especially if there were periods of inactivity or limited credit usage during service.
Strategies to Enhance Credit History Length
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Maintain Older Accounts: It might be tempting to close that old credit card you seldom use, but keeping it open can positively influence the length of your credit history.
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Think Before Opening New Accounts: While new credit can be beneficial, opening numerous accounts in quick succession can reduce your average account age.
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Check for Errors: Ensure all accounts listed on your credit report are accurate. If an old account isn’t listed, it might be worth contacting the credit bureau to rectify the error.
Veteran-Specific Insights
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Reactivating Dormant Credit Lines: If you had credit accounts before your military service and they’ve become dormant during deployments, consider reactivating them. This can strengthen your credit history length.
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Military Credit Protections: Some credit protections for active-duty military members can influence credit history length. Be sure to familiarize yourself with the Servicemembers Civil Relief Act (SCRA) and its implications on your credit.
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Leverage Joint Accounts: If a spouse or family member maintained a strong credit profile while you were on active duty, consider being added as an authorized user to their account. This can potentially boost your credit history.
Challenges in Managing Credit History Length
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The Temptation of New Offers: The allure of new credit offers with lucrative benefits can be tempting, but remember that frequently opening new accounts can impact the average age of your credit.
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Being Unaware of Account Ages: Not knowing the age of each account might lead to inadvertently closing an older account. Periodically review your credit report to stay informed.
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Overlooking the Comprehensive Picture: While the length of credit history is significant, it’s just one component of credit health. Maintaining a holistic view is essential.
Credit History in the Grand Tapestry of Financial Health
Your credit history length offers a glimpse into your financial journey over time. It paints a picture of consistency, reliability, and responsibility. For veterans, this timeline is uniquely intertwined with their service, sacrifices, and transitions.
Concluding Day 15: Embracing the Past to Forge a Brighter Future
The length of one’s credit history is, in many ways, a testament to their financial journey’s resilience and evolution. For our veterans, it’s a timeline punctuated with moments of valor, sacrifice, and adaptability.
As we wrap up today’s insights, our dedication remains steadfast: to illuminate the path of financial literacy for our nation’s heroes, ensuring they stride forward with confidence, armed with knowledge and foresight.
Stay with us for Day 16, as we continue to unravel the intricacies of credit, providing our veterans with the strategies and insights they deserve in their financial endeavors.
View Last Reply: replied 1 year, 9 months ago
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I have been a customer of Marine Credit Union since 2020. The reason I am a loyal customer of Marine Credit Union is because of personal banker Troy Fredrick. Troy is one of the most hard working banking professionals I have met and will not tell you what you want to hear but the facts. The answer you will get from Mr. Troy Fredrick is never a NO. It’s not if you will get a loan but WHEN. He will recommend a game plan for you to either enhance your credit profile or if it is something Marine Credit Union cannot do, Mr. Fredrick will open up potential avenues for his borrowers may explore. Troy always acts for the benefit of his clients and never steers his clients in a direction where he sees any potential harm. Troy Fredrick always goes above and beyond and I have witnessed him work diligently on a $1,000 Credit Rebuilder loan the Same diligent way he does a $20,000 loan. As a national manager of a national mortgage company licensed in 48 states including Washington DC, Puerto Rico and the U.S Virgin Islands, I use Troy Fredrick as a inspiration and role model to all my support and licensed personnel. I am a firm believer that it’s the people that make a great company and institution. There is a reason why Marine Credit Union is a leader in its field with a reputation for being the best of the best financial institution. Answer is a no Brainer. Troy Fredrick. Thank you Troy Fredrick for being you. You are not taken for granted and appreciated for everything you do for me and my family. Professionals like Troy Fredrick are the true silent heroes in life. Humble, honest, and transparent. Five plus stars. Like to thank upper management of Marine Credit Union for having platinum professionals like Troy Fredrick representing your awesome financial institution. God Bless. Marine Credit Union offers auto loans, RV loans, second mortgages, lines of credit, and most importantly, a great credit rebuilder program for people who need to rebuild and establish their credit. Contact Troy Frederick if you need the services of a great credit union at troy.frederick@marinecu.com
Here is the link for Marine Credit Union
marinecu.com
At Marine Credit Union, we believe every member of the community can achieve the goal of financial ownership and giving back.
View Last Reply: replied 2 years ago
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5 Pillars of a Home Loan
Become the qualified Buyer that Lenders are looking for!
Understanding what components make up a home loan will give you the advantage of being able to take the right steps towards homeownership.
I’ve been in the home lending industry since Fall of 2011. In that time, I’ve had to go through the highs and lows of understanding the home lending process. In my experience, I’ve had numerous conversations with clients that simply did not understand the home lending process. As I gained more experience, I coined the “5 Pillars of a Home Loan”. When I started explaining the lending process in this fashion during my initial consultation calls, my clients were able to quickly grasp the concept of the risk assessment of lending. This led to a boost in confidence in my clients which gave them the courage to take action. In writing this post, I’m hoping that I can go from a limited one-on-one conversation and expand my reach to communicate this concept to a larger audience to help more people find their confidence to realize that the process of homeownership doesn’t need to be this mysterious or unattainable process. It’s open to whomever is willing to obtain it.
The 5 Pillars are:
- Credit
- Repayment Ability
- Funds Needed for Closing
- Subject Property
- Loan Program
As a Borrower, before you even get started the first three pillars are the most important actionable categories you will be preparing for BEFORE you try and get pre-approved or go under contract for purchase.
Credit:
Of course this is an obvious point. But the key to understand here is this concept: “Before the lender extends you more credit, they must first determine your creditworthiness by evaluating your current credit profile”. Think about it this way: If you have a friend, and they ask you to borrow $200.00, but that has a history of never paying people back on-time/ever. If you had it to lend, would you do it? If we’re honest with ourselves, we would say no; of course a strong emotional attachment would say otherwise, but even in that statement we must deal with the reality that lenders don’t have a strong emotional attachment to their customers, outside of paying their bills on-time. This isn’t a charity, as they would say. If you want to know how to go about working on your credit, I would suggest going to https://www.myfico.com/credit-education. There you will get a TON of free information on how credit REALLY works. If you are in a position where you need credit repair, then my good friends at Kredit Kleanse have a very good track record of helping people Kleanse their credit.
Repayment Ability:
Think “personal cash-flow”. The technical lending term is debt-to-income ratio “DTI”. This is what mortgage licenses were originally created to address: to ensure lending professionals are taking the appropriate action of making sure the borrower can actually afford the home loan so that we don’t have the 2008 housing crisis all over again. The equation I use is (credit debts + court debts + proposed subject property housing expense) / (Total calculated gross income). The numbers used will vary program to program, but overall this is the basis in which all DTI is calculated. There are two distinct DTIs:
- “Housing DTI” which is ONLY: (proposed subject property housing expense) / (Total calculated gross income). A ratio of 30% is considered “healthy”
- “Total DTI” This is the complete equation: (credit debts + court debts + proposed subject property housing expense) / (Total calculated gross income). A healthy ratio is 45%.
- Key takeaway. Knowing EXACTLY what your DTI is will vary based on (1) the market in terms of what the fed-rates are, (2) which lender you are getting approved through since lenders decide their own margins and loan-pricing-levels which will dictate the final interest rate used for your housing payment, (3) the selected loan program, due to the requirements for things like debt-calculations and housing expenses like PMI, and (4) The subject property housing expenses like property taxes, homeowners insurance premiums, and community dues like HOAs.
Funds:
There’s 4 REALISTIC categories that you must consider when trying to purchase a home with a loan:
- Down-payment: People like to lump this into closing costs, but by true definition that’s simply not the case. Down-payment is a “MIR” minimum investment requirement, meaning that it’s not truly a cost (a cost is something you “spend” to acquire something). In the sense of a down-payment you are converting your liquid-cash into a hard-asset which is home equity. With this clarity, you can expect to get your money back at a later date whether that’s through selling or cash-out refinancing your home. You can put down as little as 3% of the purchase price, and there are loan programs available that don’t require a down-payment like with VA loans, USDA loans, and down-payment assistance loan programs.
- Transactional Costs: This includes appraisal costs, title costs, government fees, inspections, lender costs, etc. Typically this amount ranges from 3-6% of the purchase price and greatly depends on what market your home is in along with the final loan structuring. There are ways to get most of these costs covered. It’s best to consult with a mortgage professional to know what your options are.
- Reserves: This is not always required for a home loan, but if it does come up during your approval process, it’s good to know just what the heck lenders are talking about. In short what this means is: “after all the necessary transactional funds”, how many monthly total housing expense payments do you have remaining in your account(s). Example: If your proposed total housing payment is $3,865/mth, and you have $52,862 left in your account(s), then you have 13-months of reserves remaining in your account.
- After transaction expenses: This last point has no bearing on whether you will get approved for a home loan or not, but it is something that needs to be addressed, as some people are so excited about becoming homeowners that they forget non-transactional costs like: moving expense, deposits for utilities, time away from work for relocating, housewarming parties etc. These costs are completely unknown and not factored into your home buying process, and falls in the category of “living expenses”.
Subject Property:
Of course buying the right home for you and your family is most important to you, but when it comes to finalizing your loan approval to get to the closing table, these are the factors that the lenders care about:
- Loan-to-Value “LTV”. Without losing you with all the LTVs that there really is, in this context is do you have the minimum required equity requirement in the home according to the loan program. In ALL cases even if you have 50% equity in the home, if the loan program requires a MIR down-payment then you would have to bring those eligible funds to the closing table.
- Property Condition: Is the property habitable? Is the property safe in terms of potential obstacles that could cause injury to you or another person. In the appraisal report, there’s a property condition report that outlines these conditions. Different programs have different program requirements, so you may hear Sellers say I only want to sell to a person that has a conventional home loan knowing that conventional loan programs are the most lenient when it comes to property conditions required for final loan approval.
Loan Program:
This last pillar is more along the lines of the first 4 pillars being weighed against. In other words does your credit, DTI, Funds needed for closing, and subject property fit within the guidelines of the loan program. As you change loan programs the whole lending process changes, and even “meaningless” changes can affect your ability to close on the home. Working with the right company and professional will make all the difference in getting that home you want. Some lenders ONLY work VA loans, or don’t do USDA loans, or have “lender overlays”. A “lender overlay” is an additional guideline the lender places on-up of the actual loan program guideline. Having a consultation call with a lending professional to determine what they are capable of can save you a lot of time and stress.
A couple of my deals:
There’s one deal that comes to mind, and for the sake of privacy I will refer to the client as Gina. Gina was looking to purchase a home, but everything she went to a lender, she always got denied, but never received a clear explanation as to why. Eventually she got connected with me and we began to address each loan pillar. In doing so, it was uncovered that the funds that she was using were considered unsecured loan funds which is a no go for ANY loan program. Upon further inspection, I noticed that the funds were deposited into her account in about 45-days, with this knowledge I was able to leverage the proper interpretation of the lending guidelines. In short, we held closing another 2 weeks that way the deposited unsecured funds would be seasoned for 60-days and now would be considered eligible funds for closing. If the previous lending professional knew this they would have gotten the deal done.
Another deal I did, and again for the sake of privacy I will refer to the client as Ben. Ben had found a home that he wanted to buy, however when the appraisal report came back, there were some property conditions that neither the Seller or Buying was willing to fix, because it totaled over $40,000.00. Instead of denying the loan, we changed the loan from FHA to FHA 203k which is a renovation purchase loan, and was able to finance the cost of the repairs into the loan. A lot of lenders don’t even offer this special loan program let alone know how to actually do it late in the lending process.
What I always tell people:
Most people are just too afraid to buy a home, because it seems like such a lot of steps to get into a home. And to those people I would say you’re ABSOLUTELY correct (not what you wanted to hear huh?). The truth of the matter is that the home buying process is difficult, but the great thing about it is that you don’t need to know everything, you just have to know the right person that does know.
Another misconception is that you have to have perfect credit to buy a home, and that’s not true! I’ve gotten a lot of people with sub-600 credit scores into a home.
Lastly, getting with an experienced and knowledgeable professional early could make a huge difference. For instance there was a wonderful lady I helped become a homeowner, but it was a whole 2 years before she was ready! The key was that she had her free consultation call early, when she didn’t know which way was up. I was able to give her an action = plan that actually works, and she took my advice and implemented everything I told her. During those two years, she had challenges and unexpected financial situations that came up that ended up delaying her progress. However, she preserved and never gave into the setbacks, and now she’s a proud homeowner. You could be next!
My take on it:
Through my 12+ years of experience, I’ve seen a lot of different financial situations, and the overarching commonality is that there’s always a creative way to get anyone into a home. It could be on your part in the form of financial changes, discipline, knowledge, etc.; or the experience, knowledge, creativity, etc. of the loading professional. Is this a difficult process, yes! But it doesn’t have to be hard! ANYONE can own a home, and if you have made it this far, then that means you have the ability to become a homeowner.
When looking to use ANY financial loan instrument, the first 3 pillars are what you should be constantly working on. Focus on becoming a well qualified borrower and lenders will love lending you money because your behaviors display financial & credit worthiness. Ask yourself: “What if I am considered financial & credit worthy to lenders?” & “How do I go about becoming this person?”. Swallowing the red pill and putting in the work, will open doors that you could never have had imagined.
There was a client of mine a couple years ago that implemented the strategies I gave her. I’ll refer to her as Susie, and this is her story: Susie reached out to me about buying her first home. She had good intentions: more space for her kids, tired of paying her landlord, building towards generational wealth, and a lot of other great points. She imagined “what if” I could make this work. When she reached out to me in the Fall of 2021 and had her free home loan consultation we were able to come to the conclusion that she was not financially ready to purchase a home. Instead of allowing the reality of her situation to destroy her dreams, she asked “how do I get ready”. At this point I had to get her to willingly swallow the red pill, so I asked if she was ready for me to be brutally honest? She said, “Yes, please! I really want to do this!”. Then I said to her, “This is REALLY what the banks are saying behind closed doors, you simply don’t make enough money for the home you want. You got to make more money!”. She replied, “OK, then that’s what I’m going to do”. Now, in my experience, normally people don’t actually do what it takes to live the dreams they have. A few months went by, and she reached out to me the following Spring. When we reconnected over the phone, she said in a very confident tone, “OK , I’m ready now!”. We restarted her pre-approval process and she provided her bank statements. When I reviewed them I thought she was going to jail for criminal activities! Susie had saved over $200k, mind you her previous qualifying income was $50,000.00/year. So, how on earth did you get that much money in roughly 6-months? Come to find out, she became a tax preparer and made more money in 6-months than she’s made in the last 4+ years! I still had to do some creative loan structuring due to the loan guidelines on employment history, but she’s a homeowner now!
Final Thoughts:
By understanding the 5 Pillars of the home loan, you can come up with a good plan to work towards homeownership. If you are trying to get prepared to buy a home, then focus on the first three pillars to become a well qualified borrower. They are:
- Credit
- Repayment Ability
- Funds needed for closing
- Subject Property
- Loan Program
The time between when you have a good idea and the moment you act on that idea is the #1. #2 is executing a plan consistently over time in spite of the hardships that may arise. The first step is getting the right information from an experienced & knowledgeable professional. If you made it this far then you can become a homeowner.
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This discussion was modified 1 year, 10 months ago by Sapna Sharma.
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This discussion was modified 1 year, 10 months ago by Sapna Sharma.
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This discussion was modified 1 year, 4 months ago by Sapna Sharma.
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This discussion was modified 1 year, 4 months ago by Sapna Sharma.
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This discussion was modified 9 months, 1 week ago by Sapna Sharma.
myfico.com
Credit Education Resources to Improve Your Score | myFICO
Credit Education Resources to Improve Your Score | myFICO
View Last Reply: replied 2 years, 2 months ago
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Hello Everyone,
While you are reviewing your clients credit reports, there are some automatic violations that you need to look for. These violations will get escalated to an attorney, that will represent your client at zero out of pocket cost.
Bankruptcy:
Any creditor that was included in a bankruptcy that is still reporting a balance, post bankruptcy, is an automatic violation – Send them over.
Mixed Files
Any client that has multiple social security numbers on their credit report, names, addresses, etc (especially Jr’s, Sr’s, I, II, III, IIII, etc) Please send them over as their credit report could be mixed with another individual – Send them over
Payment Plans
Any client currently on a payment plan, making their monthly payments and the creditors are not updating the balance, This is an automatic violation – Send them over
Settlement Agreements
Any client that makes a settlement agreement and has written proof of the settlement agreement and the balance isn’t reduced to the agreed upon balance on the credit report, this is an automatic violation – Send them Over
Identity Theft
Any client with identity theft – send them over
I will need the following information:
Credit Report
Client Name
Client Phone Number
Email Address
Please forward to: ali@ficodiva.com
Start Hunting!!
View Last Reply: replied 2 years, 5 months ago
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Have you closed a loan on clients that have 4 charge off’s or more? Start getting them ready to refinance their home now! Here’s the criteria:
1. Must have 4 charge off’s or more
2. Must Live in California
3. Post BK Charge Off’s Count as well
Send them over and let us start working on their credit now so when the rates decide to take a turn for the better, your client will be ready to refinance!
This is a special program that is only available to California residents.
Let’s Do This Cali!
View Last Reply: replied 2 years, 5 months ago
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Let’s talk about a specific subject today!
CREDIT UNIONS/Community Banks
Credit Unions offer products to consumers and businesses!
Why I love Credit Unions and you should too:
Credit Unions offer many more credit BUILDING products than banks. They generally have secured loans and secured credit cards
Credit Unions are all about relationships. They are flexible! When you join as a member you are building a relationship.
Credit Unions often have Easier approval requirements than big banks and look at FICO 9 scores which are close to vantage scoring models (those on Credit Karma)
Credit Unions may not come with as many fancy rewards and offers like Chase, American Express, CapitalOne, etc. but they will give you credit cards and high credit lines.
They have a lot of money to lend
They are Great to get consumer credit cards and business credit cards.
Don’t just take my word for it, go apply the knowledge!
View Last Reply: replied 2 years, 5 months ago
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Many clients come to us with the impression that their medical bills do not matter when it comes to home buying. They say that they were told that medical bills “don’t matter” or “don’t count”, leading them to believe that their score is somehow recalculated without the medical bills when buying a home. The truth is they DO count. If they are in collection status, they lower the credit score. They count the same as any other collection, even in the mortgage versions of FICO scores. Of course, what the lender actually means is that they do not count into the DTI, but the impression that a client gets is often incorrect. Medical bills can definitely lower the credit score, even to the point of disqualifying an applicant.
View Last Reply: replied 2 years, 6 months ago
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