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Trevor Curran's Blog

By Trevor Curran | Mortgage Broker
or Lender in Bronx, NY

Low Credit Scores: THE RIGHT ADVICE


Today
, so many people are searching for help to raise their credit scores.  The help they seek is artificial; it's also looking for a short-term solution to a long-term problem.  There are NO shortcuts to success in anything, least of all a decent credit history.

I know these troubled economic times have blasted many people's finances; often this hits their credit histories hard, too.  I know, too, of the American Dream of owning a home: I've been helping First Time Buyers for 22 years as a mortgage professional.  I know how strong that desire to own can be, pushing some people, some of the time, to do anything to make the dream come true. 

When I say "anything," I mean finding the short route to success.  In the Sub-Prime BOOM, that "anything" included toxic loans with false income stated on loan applications, and consumers getting into housing payments they simply could never possibly afford.  This was a sure recipe for disaster as we have all come to learn.  I lived and worked through those "boom-times" and spoke with many potential homebuyers trying to take that short cut to homeownership.  I got in trouble a lot with people because I advocated buying a home you could afford with a 30 year Fixed rate payment.  Consumers, Realtors, and other mortgage professionals thought I was nuts and frequently told me so (although not in a kind way).  Consumers wanted what they wanted---via the shortcut---and too many professionals in our industry were ready and willing to help them.

I'm seeing
here on Trulia in the Q&A section a repeat of what I saw during the BOOM: consumers AND professionals trying to SHORTCUT their way to homeownership success.  Have these people not learned anything from those terrible toxic mortgage loans?

First, to consumers who wish to buy a home and who have low credit scores seeking advice on "repairing credit," "rapid rescore," and "...any Lenders who accept LOW credit scores."  Here's my advice to you: 

The proper advice to a consumer with low credit scores who wishes to buy a home: IF YOUR CREDIT IS BAD YOU SHOULD NOT BORROW MONEY TO BUY A HOME. GET YOUR FINANCIAL HOUSE IN ORDER BEFORE YOU ASK A LENDER FOR A MORTGAGE. There are no shortcuts such as credit repair or finding that one mortgage Lender who accepts loans for "500" credit scores!

This idea of "who does mortgages for scores below 620" and credit repair is the SAME IDEA that got us into this mess in the first place: lending to people who are not qualified to repay the loan!!!

Next, my advice to industry professionals, Realtors and Mortgage Professionals alike who provide false hope to consumers with bad credt: You professionals are providing unethical advice!!!  Listen, if someone's finances were devastated due to the financial downturn of recent times, then that person must recover sufficiently to take on the huge responsibility of paying a mortgage! 

When you professionals make statements such as, "I know a Loan Officer/Lender who can approve an FHA loan with 580 credit scores," or, "Call this guy, he's great at credit repair," or, "A good Loan Officer will counsel his/her client on improving their credit scores," you are making the same mistake as professionals made during the boom.  

Do you remember these famous statements from the BOOM years?
  • "Real estate always goes up?"
  • "Don't worry, you can refinance out of this (toxic) loan after a year because your home will be worth $65 million!"
  • "You can select the option payment that fits you best!"
  • "Don't worry, before your rate changes you can refinance to a fixed rate!"

   Offering false hope to a consumer with bad credit is exactly the same thing!  So cut it out!


I'm sorry if I sound rather obnoxious with my advice, but my polite approach doesn't seem to work when I answer these "bad credit" questions here on Trulia.  Besides, I've already been down this road.  When I blogged and participated in online forums and chats during the BOOM (Craigslist Housing forum, look me up: tcurranmortgage), I held the line on my opinion: buy a home you can afford with a 30 year fixed rate payment.  I never waivered from that opinion and I won't waiver from this one today.

Dear frustrated consumers with bad credit: take your time to put your finances in order.  Learn what a responsible HomeBuyer needs to qualify for and pay for a mortgage loan.  Then work on those things---Income, Assets, and Credit---so you can make your dream come true the RIGHT WAY.

Good luck!
Trevor Curran
NMLS #40140

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