|
One of the single
most important factors in obtaining a mortgage is your credit rating
/ credit score(s). There is not one single factor that dictates your
credit score, however, the following items have a significant impact:
amount / number of outstanding judgments and collections accounts;
the number of late payments over the past 36 months; the balance on
revolving debt in relation to the credit limit; the total amount of
outstanding open debt; the number of recently opened accounts; the
number of inquiries in the past 90 days; the amount of credit you
have established in the past.
A point to note
is that your local credit bureau is NOT the source of this information.
Thus, while we can fix your actual "credit" in order to
obtain a mortgage, these items will still remain later on in life.
In other words, the credit bureau does not have the jurisdiction
to permanently correct the data within the repository. In order
to PERMANENTLY fix credit problems, you must contact the three (3)
major repositories, TransUnion, Equifax, and Experian, directly.
While it is
impossible to "fix" a damaged credit report overnight,
there are a number of things you can do to greatly increase your
credit rating over a 60 to 90 day time period.
Mis-Reported
Late Payments / Collections
Unfortunately,
there may be items that show up on your credit report that are:
| · |
Not
your account at all |
| · |
Have been
mistakenly reported as late (your payment MUST be 30 days
late before they can report it as such) |
| · |
Open collections
or past due amounts that have already been paid (still showing
up, but last reported some time ago) |
For example,
a collection account that was paid on 4/15/94 and still showing
up late on your credit report, although it hasn't been reported
since 3/94, is still affecting your credit rating.
In order to
PERMANENTLY correct this information, you must contact all three
repositories at the following numbers:
· TransUnion: (800) 888-4213
· Equifax: (800) 216-1102
· Experian: (888) 397-3742
It is extremely
important that you have all the information about the account in
front of you when you call in, including:
| · |
Creditor
/ Institution reporting the late payment |
| · |
Account
number that showed up |
| · |
Amount
Past Due / Outstanding Collection / Date Reported Late /
Date Last Reported |
When you reach
a customer service representative, let them know that you have a
dispute about items that are showing up on your credit report and
that you want them "PERMANENTLY FIXED / REMOVED."
If you have something that does not belong to you, you want to file
a "FORMAL DISPUTE" that this account either does
not belong to you, or that the late payment was not in fact late.
If the account does belong to you, but you paid it off in the past,
you want to let the customer service representative know that you're
not disputing that this is your account, but that you paid it off
and that you want it to permanently show up as being a $0 balance.
** Note that
for every derogatory account, you must go through this same process
with all three (3) credit repositories, otherwise, it may be fixed
on one of them, but not the other two. **
Outstanding
Judgments / Collections
If
there are past due items / open collections on your credit report,
it is essential that you get them cleared as quickly as possible.
Take the following steps to insure that they are sufficiently removed:
| · |
Track
down the institution that currently holds the collection
(they are sometimes transferred among agencies). |
| · |
Call
the institution and negotiate a settlement amount. Most collection
agencies will accept 50% of the outstanding balance
in order to satisfy your account. |
| · |
Make
sure you keep accurate records of phone numbers you called
and the representative you spoke with in case
you need to follow up with them. If at all possible, get
their direct extension numbers. |
| · |
Once
you arrange to make the payment, always be sure to GET A
RECEIPT to show the account
has been paid in full. This will save you time and hassle
when trying to get the data permanently removed. |
After you have
paid the account in full and received your receipt, refer back to
the previous section, "Mis-Reported Late Payments / Collection,"
in order to get the data permanently corrected on your credit report.
When you're speaking with the customer service representative at
the credit repository, be sure to supply them with the phone number
and contact person with whom you worked with so they can act quickly
in getting your credit rating corrected. This will alleviate hassles
and make the customer service representative much more eager to
move your request to the top of their pile of paperwork.
Again, remember
to call all three (3) repositories in order to get your information
corrected. Failure to do so will mean that the information could
still show up under one of the other repositories.
Essential Tips
| · |
Remember,
inquires bring down your credit score, so only give permission
to pull credit when it is absolutely necessary. |
| · |
Many new
open accounts will greatly lower your credit rating. Open
as little new credit as possible. |
| · |
Too many
accounts with balances can lower your credit score. If you
have several credit cards with small balances
on them, consolidate them all into one credit card with a
higher limit and lower interest rate. |
| · |
Credit
scores are weighted heavily on your most recent credit activity.
In other words, a late payment 2 years ago will
not effect your credit score nearly as bad as a late payment
2 months ago. Make sure you absolutely make all
your payments on time and allow no new late payments
or collections. |
| · |
Treat
the customer service representatives pleasantly. Remember
that they are not personally responsible for
making the mistake. If you treat them with respect and understanding,
they will be much more likely to help you out. |
Conclusion
Once
you have completed all of these steps, the hard work is out of the
way. It typically takes 60-90 days for these changes to be reflected
in your permanent credit file. Once you have made the final call to
the third repository, mark your calendar 60 days out to give us a
call back and we can verify what information was successfully updated
and review where you stand in getting a mortgage.
If you should
have any questions about improving your credit rating, please feel
free to contact a loan specialist at (866) 326-1369 or E-Mail
Us.
|
