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Mary Beth Harrison's Blog

By Mary Beth Harrison | Agent in Dallas, TX
  • The Top 10 Credit Don’ts During the Loan Process

    Posted Under: Home Buying in Dallas, Financing in Dallas, Credit Score in Dallas  |  April 11, 2011 12:23 PM  |  828 views  |  No comments
    1. DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM.
    This would include adding new accounts, co-signing on a loan, changing your name or address, with the bureaus. The less activity on your reports during the loan process, the better.

    2. DON’T APPLY FOR NEW CREDIT OF ANY KIND.
    Including those “You have been pre-approved” credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit scores immediately. Depending on the elements in your current credit report, you could lose anywhere from one to 20 points for one hard inquiry.

    3. DON’T PAY OFF COLLECTIONS OR CHARGE OFFS DURING THE LOAN PROCESS.
    Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it through escrow-at closing.

    4. DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS.
    This is the fastest way to bring your scores down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at ALL times during the loan process. If you decide to pay down balances, do it across the board. Meaning, pay balances to bring your balance to limit ratio to the same level on each cards (i.e. all to 30% of the limit, or all to 40% etc.)

    5. DON’T CONSOLDIATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS.
    It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in 4. If you want to save money on credit card interest rates, wait until after closing.

    6. DON’T CLOSE CREDIT CARD ACCOUNTS.
    If you close a credit card account, you will lose available credit, and it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you HAVE to close a credit card account, do it after closing.

    7. DON’T PAY LATE.
    Stay current on existing accounts. Under the new FICO scoring, one 30-day late can cost you anywhere from 50-100 points, and points lost for late pays take several months if not years to recover.

    8. DON’T ALLOW ANY ACCOUNTS TO RUN PAST DUE—EVEN 1 DAY!
    Most cards offer a grace period, however, what they don’t tell you is that once the due date passes, that account will show a past due amount on your credit report. Past due balances can also drop scores by 50+ points.

    9. DON’T DISPUTE ANYTHING ON YOUR CREDIT REPORT ONCE THE LOAN PROCESS HAS STARTED.
    When you send a letter of dispute to the credit reporting agencies, a note is put onto your credit report, and when the underwriter notices items in dispute, in many instances, they will not process the loan until the note is removed and anew credit scores are pulled. Why? Because in some instances, credit scoring software will not consider items in dispute in the credit score- giving false data to the lender.

    10. DON’T LOSE CONTACT WITH YOUR MORTGAGE AND REAL ESTATE PROFESSIONALS.

    If you have a question about whether or not you should take a specific action that you believe may affect your credit reports or scores during the loan process, your mortgage or real estate professional may be able to supply you with the resources you need to avoid making mistakes that could drop your credit scores or possibly, cause you to lose the loan.


    Mary Beth Harrison,
    www.dallastexasrealestateblog.com

  • It ain’t over until the fat lady sings…

    Posted Under: Home Buying in Dallas, Financing in Dallas, Credit Score in Dallas  |  March 28, 2011 10:27 AM  |  585 views  |  No comments

    …or your lender, they get the final say about whether you actually get the loan you have applied for.

     

    You have found your home, successfully navigated the home buying and loan process, and you have signed all of the forms needed at closing to purchase the house. Yeah you made it! Don't break out the champagne yet.

     

    The lender/underwriter has the right to verify your information again before closing or even right after after closing. Yes, they will call your work and make sure you are still employed and check your credit score one more time. You want to make sure you do not buy any big-ticket items or let anyone pull your credit (for example buy a car or a house full of furniture). If your credit obligations increase by more than 2% they have to send the file back through underwriting and can delay closing or disqualify you from the loan altogether.

     

    While this use to be a practice used by some lenders some of the time, it is now a mandated practice that must be used.

     

    Mary Beth Harrison, www.dallastexasrealestateblog.com

  • Your Credit Score is Everything

    Posted Under: Home Buying in Dallas, Financing in Dallas, Credit Score in Dallas  |  March 16, 2011 10:15 AM  |  495 views  |  No comments

    Credit ScoreYou want to buy a house, maybe your first or your 5th, it does not matter, the rules are the same. If you need to get a loan to buy the house you are going to have to have your credit checked. The higher your credit score the easier it will be to get a loan.

    Do you have any 30 day or more late pays? Do your credit cards hold a high balance? All of these things can affect your credit score and therefore your ability to buy a home or it can affect your interest rate which will have a bearing on your payment.

    You can run your own credit report and should each year. There are several services that provide free reports. Don't get caught off guard when you are ready to make a move.

    Mary Beth Harrison, www.dallastexasrealestateblog.com

  • How Credit is Calculated, How to Analyze Tenant Credit, and How to Improve Your Own Credit Scores

    Posted Under: Home Buying in Dallas, Financing in Dallas, Credit Score in Dallas  |  September 22, 2010 9:10 AM  |  326 views  |  No comments

    FICO Credit ScoreAs an investor you need to decide what your strategy will be. Will you buy, renovate and sell or buy and hold for rented property? Your answer to the statement above question will help determine what kind of house to buy, where to buy, and the price to pay.

     

    A good realtor who deals with investors will be able to prove a ROI (Return On Investment) on any property.

     

    The biggest mistake I see is paying too much for a home and/or spending too much on the renovation. Do your homework, make wise decisions and reap the benefits of real estate investing.

     

    Mary Beth Harrison, www.dallastexasrealestateblog.com



    Reference Article – If you’re a real estate investor, you’re probably familiar with the routine: you walk into a bank to borrow money, and the loan officer takes one look at your credit history  and either saying “Sure, we can do the loan, you’ll need to put down five (or ten) percent,” or “Well, we might be able to do the loan, but you’d have to put twenty-five percent down at the table…” Simply put, real estate investors can’t afford to have bad credit, because credit means buying power, and buying power means everything when it comes to real estate investing.


    Having worked in the credit industry for many years, I can assure you that you do NOT need “credit counseling” or “credit improvement services,” with the possible exception being if your credit report has erroneous data on it (credit counselors have a direct line to the bureaus to expedite the removal of erroneous data). What you do need, however, is to understand how credit is calculated, so that you can precisely and effectively raise your credit scores.

    As touched on above, the first step any real estate investor should take to improve their credit is to pull a copy of their own credit report and review it carefully, to check for errors. If you find errors, call the bureaus directly to report them (it doesn’t take much longer than having a credit counselor do it for you, and you’ll save yourself a lot of money).

    But how is credit calculated? Credit bureaus use a relatively small range of data to determine those all-powerful numbers, and only use a handful of criteria to arrive at your score. Some of these measures are obvious and universally understood, while others are widely misunderstood and cause credit penitents a great deal of confusion and wasted efforts.

    First, a measure everyone understands: late payments. Quite simply, any credit payment that you make more than thirty days late is a mark against you, and each mark weighs a lot. There are, however, only a few types of bills that report to credit bureaus, which will allow you to prioritize if you’re having a hard month financially: mortgage loans , auto loans, student loans, personal loans, and credit cards  are generally the only loans that report to the bureaus. If you have a rental lease on a ski condo in Colorado, it’s extremely unlikely that your landlord  will go through the trouble of reporting your late rental lease payment to the credit bureaus or any other tenant credit agency, so pay your mortgage  and car loan before paying that rental lease, if you’re pinched one month.

    Second, credit bureaus calculate the average age of your credit accounts, and hold it against you if all of your accounts are brand new. Rather, they like to see old, stable, credit accounts; a mortgage from fifteen years ago that you don’t run and refinance every other year, that same credit card you’ve had since you were eighteen, etc. Essentially, credit bureaus want to see stability, and they don’t want to see frantic efforts by you to find new credit and borrow money at every opportunity. Likewise, they don’t like to see your credit report being pulled every other day, as you go from bank to bank desperately looking for money. There’s a small, temporary hit to your credit each time you have it pulled in an attempt to borrow money, which doesn’t apply when you pull it yourself through the bureaus.

    Another mark that can hurt your credit is the existence of public records that indicate that you owe money to someone and haven’t paid it. Judgments, tax liens, bankruptcies, evictions and the like are all brutally damaging to your credit report, so even though you can get away with being a little bit late on that rental lease without it showing up on your credit, if you let it go as far as eviction, it will show up, and it will hurt.  So, (drum roll please), make sure you pay your bills!

    One last big one that most people misunderstand is that credit bureaus scrutinize the amount of your credit that you’re actually using. Basically, they like to see that you’re credit-worthy, and that banks and lenders find you trustworthy enough to extend a lot of credit to, but they want to see that you don’t abuse that credit, by charging up every card in your wallet. What they do is they take a ratio of the amount of credit you’ve charged up, over the amount of credit available to you, and ideally this number should be no more than a third.

    When evaluating tenant credit reports, there are a few things in particular to analyze closely. As you've seen, scores can be deceiving, and you wouldn't want to deny a good tenant just because they have a penchant for opening in-store credit cards. Look particularly closely at their late payment history, look for judgments, liens and bankruptcies, and look at their address history, to see how often they've moved around. Once you get the hang of viewing tenant credit data, you can predict with sharp accuracy whether a tenant is responsible about paying their bills and how long they're likely to remain a tenant.

    Successful, stable, responsible, middle- and upper-class people aren’t born being financially savvy, they’re raised that way. Having bad credit costs a lot of money and prevents a lot of opportunities, and the rich raise their children to protect their credit because it will open many doors and save them an incredible amount of money. Protect your credit, because it is the difference between owning a home or owning a piece of paper saying “rental lease;” it’s the difference between buying five investment properties each year or buying two; it’s the difference between being stable and wealthy and simply squeaking by.

    Brian Davis, NuWire Investor

  • How Credit is Calculated, How to Analyze Tenant Credit, and How to Improve Your Own Credit Scores

    Posted Under: Home Buying in Dallas, Financing in Dallas, Credit Score in Dallas  |  September 22, 2010 9:10 AM  |  305 views  |  No comments

    FICO Credit ScoreAs an investor you need to decide what your strategy will be. Will you buy, renovate and sell or buy and hold for rented property? Your answer to the statement above question will help determine what kind of house to buy, where to buy, and the price to pay.

     

    A good realtor who deals with investors will be able to prove a ROI (Return On Investment) on any property.

     

    The biggest mistake I see is paying too much for a home and/or spending too much on the renovation. Do your homework, make wise decisions and reap the benefits of real estate investing.

     

    Mary Beth Harrison, www.dallastexasrealestateblog.com

     


    P>

    Reference Article – If you’re a real estate investor, you’re probably familiar with the routine: you walk into a bank to borrow money, and the loan officer takes one look at your credit history  and either saying “Sure, we can do the loan, you’ll need to put down five (or ten) percent,” or “Well, we might be able to do the loan, but you’d have to put twenty-five percent down at the table…” Simply put, real estate investors can’t afford to have bad credit, because credit means buying power, and buying power means everything when it comes to real estate investing.

    Having worked in the credit industry for many years, I can assure you that you do NOT need “credit counseling” or “credit improvement services,” with the possible exception being if your credit report has erroneous data on it (credit counselors have a direct line to the bureaus to expedite the removal of erroneous data). What you do need, however, is to understand how credit is calculated, so that you can precisely and effectively raise your credit scores.

    As touched on above, the first step any real estate investor should take to improve their credit is to pull a copy of their own credit report and review it carefully, to check for errors. If you find errors, call the bureaus directly to report them (it doesn’t take much longer than having a credit counselor do it for you, and you’ll save yourself a lot of money).

    But how is credit calculated? Credit bureaus use a relatively small range of data to determine those all-powerful numbers, and only use a handful of criteria to arrive at your score. Some of these measures are obvious and universally understood, while others are widely misunderstood and cause credit penitents a great deal of confusion and wasted efforts.

    First, a measure everyone understands: late payments. Quite simply, any credit payment that you make more than thirty days late is a mark against you, and each mark weighs a lot. There are, however, only a few types of bills that report to credit bureaus, which will allow you to prioritize if you’re having a hard month financially: mortgage loans , auto loans, student loans, personal loans, and credit cards  are generally the only loans that report to the bureaus. If you have a rental lease on a ski condo in Colorado, it’s extremely unlikely that your landlord  will go through the trouble of reporting your late rental lease payment to the credit bureaus or any other tenant credit agency, so pay your mortgage  and car loan before paying that rental lease, if you’re pinched one month.

    Second, credit bureaus calculate the average age of your credit accounts, and hold it against you if all of your accounts are brand new. Rather, they like to see old, stable, credit accounts; a mortgage from fifteen years ago that you don’t run and refinance every other year, that same credit card you’ve had since you were eighteen, etc. Essentially, credit bureaus want to see stability, and they don’t want to see frantic efforts by you to find new credit and borrow money at every opportunity. Likewise, they don’t like to see your credit report being pulled every other day, as you go from bank to bank desperately looking for money. There’s a small, temporary hit to your credit each time you have it pulled in an attempt to borrow money, which doesn’t apply when you pull it yourself through the bureaus.

    Another mark that can hurt your credit is the existence of public records that indicate that you owe money to someone and haven’t paid it. Judgments, tax liens, bankruptcies, evictions and the like are all brutally damaging to your credit report, so even though you can get away with being a little bit late on that rental lease without it showing up on your credit, if you let it go as far as eviction, it will show up, and it will hurt.  So, (drum roll please), make sure you pay your bills!

    One last big one that most people misunderstand is that credit bureaus scrutinize the amount of your credit that you’re actually using. Basically, they like to see that you’re credit-worthy, and that banks and lenders find you trustworthy enough to extend a lot of credit to, but they want to see that you don’t abuse that credit, by charging up every card in your wallet. What they do is they take a ratio of the amount of credit you’ve charged up, over the amount of credit available to you, and ideally this number should be no more than a third.

    When evaluating tenant credit reports, there are a few things in particular to analyze closely. As you've seen, scores can be deceiving, and you wouldn't want to deny a good tenant just because they have a penchant for opening in-store credit cards. Look particularly closely at their late payment history, look for judgments, liens and bankruptcies, and look at their address history, to see how often they've moved around. Once you get the hang of viewing tenant credit data, you can predict with sharp accuracy whether a tenant is responsible about paying their bills and how long they're likely to remain a tenant.

    Successful, stable, responsible, middle- and upper-class people aren’t born being financially savvy, they’re raised that way. Having bad credit costs a lot of money and prevents a lot of opportunities, and the rich raise their children to protect their credit because it will open many doors and save them an incredible amount of money. Protect your credit, because it is the difference between owning a home or owning a piece of paper saying “rental lease;” it’s the difference between buying five investment properties each year or buying two; it’s the difference between being stable and wealthy and simply squeaking by.

    Brian Davis, NuWire Investor
  • Bill Would Protect Credit Scores During Mortgage Modification

    Posted Under: Credit Score in Dallas  |  August 16, 2010 9:26 AM  |  215 views  |  No comments

    Mortgage ModificationIf you are lucky enough to get your lender to modify your mortgage, you shouldn’t end up dogged by a miserable credit score. That’s the essence of a bill introduced in Congress recently by U.S. Rep. Jackie Speier, D-Calif. It would insulate people from taking a credit score hit going through loan modifications.

    Speier is trying to give people a fresh start as they get either a permanent modification that makes monthly payments more affordable, or a temporary modification, which lenders sometimes use before considering permanent relief.

    “I am seeing people with sterling credit have their scores dinged as much as 100 points,” Speier said.

    A 100-point drop is substantial. It can prevent people from getting loans on cars or homes, life insurance or even a job. For a small business, a credit-score hit can be a death knell as lenders refuse a line of credit essential for operations.

    According to the U.S. Department of Housing and Urban Development, the No. 1 reason people are missing home payments is because they have lost a job or had to take a lesser-paying job. About 16% of Americans are unemployed or underemployed, and there are five applicants for every job available.

    So if a lower credit score keeps people from getting a new job, that’s counterproductive for the person and the economy, said Speier. She added that modifications benefit neighbors and communities because property values remain intact as people stay in homes, make payments and mow lawns.

    But people who have paid their bills and sought no special help are not likely to see why some people should get special treatment.

    To read the full article go to www.dallastexasrealestateblog.com/blog

  • 15 Billion in Credit Card Fees Charged! …and the New “Credit Card Act”

    Posted Under: Credit Score in Dallas  |  October 14, 2009 7:42 AM  |  453 views  |  No comments

    relocation-guide-21In the last year, have you experienced a credit card interest rate increase, a fee you felt was unfair or a credit line reduction for no specific reason? If so, did you receive any notice or explanation as to why? Were you aware of your options when your interest rate was significantly increased? Did you realize that your credit scores were most likely negatively affected by these changes? For most Americans, the answers are not favorable. Many consumers across the United States feel as though they are held hostage by the credit card companies and deal with the lack of transparency as a “necessary evil.” To pour salt on the wound and highlight the magnitude of the challenge, it was reported that credit card providers collect around $15 billion in penalty fees each year.

    The good news is that the government is trying to help rectify some of the challenges noted above. The Credit Card Accountability, Responsibility and Disclosure Act of 2009—commonly referred to as the Credit Card Act (“The Act”)—was signed into law on May 22, 2009 and represents some of the most protective credit card consumer legislation in 60 years. Everyone who uses a credit card should at least have a basic understanding of The Act and how it could impact their personal situation and credit profile.

    Effective August 19, 2009, two key provisions of the law were enacted. First, until now, consumers were only given 15 days notice if their interest rate was going be changed by their credit card provider. Now, they must alert you 45 days prior to any change. For card holders who read their notices, this gives them reasonable time to call their creditor and “plead their case” for a better interest rate before it takes effect. If you have a good credit profile and they won’t reduce your rate, then move your business to a competitor. Secondly, card holders will now have 21 days instead of 14 to make their payments. This is a real win for consumers who are fighting to keep on top of their bills and those who travel a lot.

    The most significant portions of the law go into effect on February 22, 2010. Here are a few highlights of those changes:

    NO UNFAIR CHANGES – Unlike today, credit card issuers will not be able to change your credit status at anytime, for any reason. So, if you miss a payment with one creditor, another cannot automatically increase your interest rate or drop your credit limit, which often

    unfairly affects your credit scores.

    RESTRICTIONS UNDER 21 – Consumers under the age of 21 will need a co-signer or a job in order to get a credit card. This is designed to help control the number of young, college-aged students building up credit card debt and negatively impacting their credit profile before they even graduate.

    OVER-LIMIT FEE CONTROL – Credit card companies will no longer be allowed to let card holders exceed their limit without having the card holder’s permission to do so. If you have not agreed to allow over-limit exceptions, your card will simply be declined, protecting your credit score and protecting you from over-limit fees.

    LATE FEES – If your credit card provider charges late fees, they must clearly disclose them on your monthly statement.

    CREDIT CARD AGREEMENTS – Changes occur so often that consumers don’t know which agreement is accurate. Creditors will now be required to have a copy of your credit agreement available for you on a website.

    Americans need a healthy flow of credit in our economy. However, for too long, credit card company practices have steadily grown unfair against the consumer. The Act takes a strong, positive first step forward in creating transparency for everyone. Nevertheless, it is still critical to actively manage and monitor your credit profile to ensure you are fully aware of any changes.

    Click here for the full story…

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    P.S. For more information about foreclosures and short sales in Dallas, please visit the website at www.avoidforeclosureaid.com or call 214-365-6500 or email info@avoidforeclosureaid.com.

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