Get a mortgage of a low credit Score: how it really hurts you

In 2007, Fannie and Freddie Mac unveiled standards-based pricing "risk", which makes it more difficult for consumers with poor credit scores get mortgages. Since the recession of 2008, he'd been tricked has continued to tighten their standards, that is, that building up payment history has become a priority for many Americans.

Mortgage interest rates should be based on credit scores of borrowers, says Bankrate.Consumers with higher scores of 740 has a better chance at a fixed rate lock is lower than those below this level. Unfortunately, homebuyers who are uneven or credit score now pay this target you thousands of dollars more each year on their mortgages.

"Typically, the risk-based pricing tiers shift about all 20 points," the analyst industry Nicholas Gibran says Bankrate. "If the result your 640, you must pay for all three points on a $ 400,000 loan closing. ", which means that you need 6000 $ or $ 12,000 from more."

The Federal Housing Administration loans, don't rely on a minimum credit score at that time, it may be good for borrowers who do not meet the requirements of other home loan he'd been tricked.

Tags: credit Score, credit scores, mortgages rates

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Basic too easy a credit score

Have you ever wondered how some people can easily and effortlessly waltz into a bank and walk out with a home loan, car loan, or line of credit, while others get rejected time after time?
Have you ever been puzzled at the complex science behind credit scoring? It is a somewhat confusing and mind-numbing mix of numbers, ratios, and complex algorithms used by our lenders these days to supposedly calculate your risk as a borrower.

Are you tired of feeling confused at the lingo that so many lenders throw around as if you knew what they were saying as they turn you down for having insufficient credit scores?
You are about to discover the simple credit scoring secrets that lenders use to help evaluate your risk as a borrower.

I will pull apart the few components of a credit score for you so that by the end of this, you will be able to better understand exactly what you must pay attention to with regards to your own credit, so that you can become and maintain status as an "A" borrower forever more.

What is a Credit Score?

A credit score is a number that lenders use to estimate their risk if they should choose to lend you money.

Experience has shown them that people with a high credit score are usually going to pay them back with little or no problems. Conversely, borrowers with lower scores tend to be a higher risk to them and tend to be more likely to pay late or perhaps stop making payments altogether.
Credit scores (usually) range from 340 to 850 points. As your score climbs, lenders tend to offer lower interest rates and better terms. Conversely, the lower your score dips, the more likely you are to have higher interest rates, higher fees, tougher terms, and potentially even get declined by the lender altogether.

How are Credit Scores Calculated?

The three major credit reporting agencies don't necessarily use the same scoring. So don't be surprised when you see 3 different credit agencies come up with 3 slightly different scores.
Your credit score is a number generated by a mathematical formula based on the information and data in your credit report. Your information is further compared to millions of other people's information and data.

This number is a pretty accurate prediction of how likely you are to pay your bills and honor your commitments to your lenders.

What's a Good Credit Score vs. a Bad Score?

The scale runs from 300 to 850. The vast majority of people will have scores between 600 and 800. A score of over 700 is usually considered "excellent credit" and will usually get you the most favorable interest rates on loans, mortgages, and credit cards. If the score is in the low 600's or below, then you are viewed as a higher risk, and considered to have "mediocre" to "poor credit".
Here's a look at national averages for credit scores among the US population in 2003:

Up to 499: 1%

500 - 549: 5%

550 - 599: 7%

600 - 649: 11%

650 - 699: 16%

700 - 749: 20%

750 - 799: 29%

Over 800: 11%

What Goes Into The Score, and Which Parts Are Most Important?

35% - Payment History

30% - Amounts You Owe

15% - Length of Credit History

10% - Types of Credit

10% - Newly Established Credit

Let's break this down and make it simple. Bottom line is, at the end of this conversation you need to know just what this means to you. So let's keep going here.

Payment History:

This category of the score reflects things like...

...Number of accounts paid as agreed

...Delinquent accounts

...Number times past due on payments

...How long you've been past due

...Time elapsed since you had a past due payment

...Collections, foreclosures, liens, judgments, etc

...Negative public records

How you pay your bills is a huge deal. Paying all your bills on time is good. Paying them late on a consistent basis is not good. Having accounts that were sent to collections is worse yet. Going into bankruptcy is even worse still.

What You Owe:

Basically this category is looking for signs of being over-extended, and making sure you are paying down your existing debts consistently

-How much you owe

-How much of your credit limit you've actually used

-Amounts you owe on installment loans vs. their original balances

-Number of accounts that are paid down to zero

-Remaining available credit

People with the high scores tend to use credit sparingly and keep their balances low. People who consistently max out their balances are usually considered to be a higher risk. People who never use credit will never have a history (good or bad) to monitor or track.
Also keep in mind that if you have $50,000 of available credit spread over 5 cards or accounts, then you are best advised to keep your balances at $25,000 or less. Furthermore, you should spread that debt over all 5 cards. This is better than maxing out 3 of your cards for the $25,000 and having 2 cards with a zero balance.

Length of Credit History:

Length of time since accounts were opened, time that's passed since the last activity, and the total length of time tracked by your credit report are all components here.
Basically, the longer you have good history, the better your scores tend to be.

Mix or Type of credit:

The best scores will have a mix of both revolving credit (credit cards) and installment credit
(mortgages or car loans). When you are lopsided one way or the other your scores will slip downward. Even if your payments are good and account balances in check.

Your New Credit:

The final category to explore is new credit. Basically this is a question of how much new credit have you been applying for. How many credit applications have you been filling out with different lenders of any type?

This section wants to know the number of accounts you've recently opened. It further analyzes the time that's passed since recent inquiries or newly-opened accounts. It analyzes the number of recent credit "inquiries" or "credit pulls" you have asked for recently even if it didn't result in a loan.
In general, it just monitors that you aren't trying to open to many accounts at any one time, thereby stretching yourself too thin.

Conclusion:

Well there you have it. A short, sweet, bullet point synopsis that helps us better understand the nature of the credit report, and how is used and calculated.
Keep in mind that credit scores are not perfect.

It is quite common that a person's report may have some or a lot of misinformation. This would not be the end of the world. So don't sweat it. But do take it seriously. There are ways to improve your credit.

It is in your BEST INTEREST to make your score as high as possible, as quickly as possible. And now that you know how your score is based, your can target your game plan to effectively become the perfect borrower.

BIO Dan Ostler is the owner of LeaseOptionHomeBuying.com . Dan is an author, speaker, business owner, investor, and one of the nations leading Lease Option Consultants. He has been offering housing solutions and consulting advice to families with credit issues in all parts of the country for the past 8 years, and welcomes all visitors to his website for tons of **FREE** Information.

Raise your credit score in 30 days!

OK, so you have a little (or maybe not so little) problem with your credit report. All is not lost, but you will have to dedicate some effort and time to "fix or repair" your credit score. Keep in mind that it took more than 30 days to screw your credit score up, so make sure that you follow the basic guidelines of restoring it.

There's a lot of jargon and information you need to know before you start your repair project. Repairing your credit score is not brain surgery but you do need to adhere to some basics in order to accomplish your goal of a higher credit score. There's a lot of misinformation out there about just exactly what a credit score is and how you improve it.

Don't Get Ripped Off

Another problem with credit repair is there are 100's if not 1000's of scoundrels out there that prey on the unsuspecting person with less than stellar credit. They will make unrealistic claims that promise to fix anything for a price. And the worst part is that not only will they take your money, they can actually cause damage to your credit score.

Our less than perfect credit rating system is regulated by the government. Which can be both a good thing and a bad thing. But you should know a few facts and don't get fooled.

You can also get a FREE credit report from all three major credit bureaus. Don't pay for something that you can get for FREE. Go o the Federal Trade Commission's site here to get the full details:
[http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm]

The only catch 22 is that you don't get a credit score with your credit reports. But if you have been turned down by a creditor (or given what you think is an unfair rate) you can request the information from them and they will provide the score they used to determine your rate.

But it's still pretty clear on the credit reports what might be having a negative impact on your credit score. So these reports are the first step in working on raising your credit score.

And keep in mind there are no secrets, no special methods, and certainly no one has any better chance than you, the owner of the credit score, to repair or fix your credit score.

What Is A Credit Score?

A credit bureau, or credit repository, is an entity that gathers information about consumers' credit histories. Your credit history/report includes information regarding the following items:

-- Identity information such as your name, address, social security number, spouse and date of birth.

-- Payment habits such as how promptly you have made payments to previous creditors.

-- Public records such as records of arrests, indictments, convictions, lawsuits, tax liens, marriage, bankruptcies, and court judgments.

-- Debts.

-- Other relevant credit data Information concerning your current employment such as the position you hold, length, and possibly your income.

-- Information about your personal history such as the number of dependents you have, your previous addresses and information about your previous employment.

Credit bureaus sell credit reports to credit grantors, such as banks, finance companies, and retailers. Credit grantors use credit reports to determine whether or not a potential borrower is creditworthy.

There are three major credit bureaus in the United States:

* Equifax: 800-685-1111

* Experian: 888-397-3742

* Trans Union: 800-916-8800

These three bureaus provide nationwide coverage of consumer credit information. The credit bureaus are a for-profit system that generates billions of dollars in revenue each year from selling copies of credit reports to creditors and mailing lists. Trans Union made 1.5 BILLION dollars last year.

It is essential to understand that Credit Bureaus are nothing more than record keepers, and sometimes not very good ones. Consider the fact that these organizations are tracking millions of people with up to 40-50 entries per individual. In all fairness, I can't even type a letter without making a couple of typos.

So mistakes happen, wrong information gets into the wrong file, and all three credit bureaus don't talk. They are competitors so they don't share information and all three can generate a different score. They all loosely base these scores on the FICO method.

FICO scores are based on 22 pieces of data collected by the three major credit bureaus. The lowest possible score is 300, while the highest is 850. None of the credit bureaus will apply these methods exactly the same and also may not have the same data so it's common to get a different score from each one.

The lending companies (or creditors) will usually use this FICO based score provided to determine the risk of lending money or granting credit. The higher your score, the less risk, so the lower the rate. The difference in credit cost can be dramatic. If you are applying for a $216,00 mortgage and have a score of 630, your rate could be $1568 per month at 7.89%. If your rate was 680, you could get a rate of $1394 at 6.7%. That's a $2100 per year difference so you can see how 50 points can have a big impact on your credit cost.

Basic Repair/Fixing Methods

You often hear that you should dispute (challenge) any and all negative information. But most people don't know or advisors fail to mention that the creditor and the credit bureau may declare the disputes "frivolous" and not have to respond. So before you go crazy on disputes, keep that in mind. Many of the negative items do have a time limit imposed, depending on the item. Here's a good set of guidelines on what to challenge:

-- Information is not based on you (mistaken identity)

-- Information is inaccurate based on what actually occurred.

-- Information is outdated - there was an issue but it has been resolved.

-- The time limit on the information has occurred.

-- The information is totally incorrect with no valid basis

So once you have requested your FREE copies of your credit reports, you need to review them to find any inaccurate or false information. When you find a negative entry that you want to dispute, you need to send a letter of dispute, or file the dispute on line directly from the credit bureau website. Some say the online method is much quicker and since USPS does take days it probably is faster. The credit bureau has up to 30 days to verify the dispute with the filer of the negative information. If you forget to give all the necessary information and they request more information they can get an additional 15 days (total 45).

You can get a sample credit dispute letter here: www.newcleancredit.com/creditdisputeltr.pdf. So it's important to make sure you provide all required information to shorten the process. Once filed the credit bureau will respond to you with the results.

The good news about our credit reporting system is that time marches on and you can start improving your credit score immediately. Most experts in the financial industry agree that the last 18 months is the most important. Try and negotiate any negative items that are true (bring payments up to date, settle old claims, work out new payment plans, whatever). Most creditors will be more than willing to work with you if you make an honest effort in resolving the negative issue. But make sure the creditor agrees to update your credit record.

You can also make sure any good credit information is listed. If you have credit experience that is favorable, write or contact the creditor and as to have it added to your credit report. Many times good information is never reported. You can also open new credit accounts from creditors and pay them off early (even if you have the money to pay cash) to get addition good credit entries.

Get our Free Repair Your Credit In 30 Days Guide for more details on how to raise your credit score here: www.newcleancredit.com/resources.shtml

Everyone should check his or her credit report each year. It's now Free and won't take much time as long as you stay on top of it. You can request one credit bureau at a time every 4 months and have a good idea of what's been entered in the past 12 months.

New Clean Credit is a website that provides free information on Credit Repair. Along with their Free Repair Your Credit In 30 Days Guide they have a large amount of articles on just about every credit related subject. Increase your credit score today. Click here to learn more: www.newcleancredit.com/

Jim Baines is a staff writer for the New Clean Credit web site. Jim has worked in the credit industry for over 20 years and helps address credit repair issues for our users.

As Americans pay debts and Delinquency rates, Tumble

Credit card ??????? fell again in the second quarter as consumers continued to pay down their debt, according to TransUnion, one of the national credit bureaus. Delinquency rates are based on the number of accounts with membership card holders at least written since 90 days late on payments.

The rate dropped 0.92% second quarter, down 17.1 percent from the first quarter. Year, the credit card has fallen ???????-21.3%.The average consumer credit card debt in the u.s. dropped for the fifth consecutive quarter, to $ 4,951, a decline of 4.1 percent last quarter, the average ... hovering around $ 2,293.

"It seems that consumers have come to realize the material improvement is likely to unemployment in the short term, this is the time to save vs. spend balance. it remains to be seen whether this dynamic short-term or new paradigm of consumer behavior," said Ezra Becker, TransUnion representative.

Due to the recession, the Americans have been focused on reducing their debt on their credit management, restructuring of their savings.

Tags: credit card debt, credit cards, savings

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Five tips to the raise your credit score

The "American dream" is a reality for more families than ever before. The US Department of housing and urban development (www.hud.gov) over 67.7 percent of Americans are homeowners now. This is the highest home ownership rate ever.

The chances of becoming a homeowner are significantly enhanced if you know your credit score are. Lenders use many factors in determining whether a loan and your Credit score to approve, is one of you.Lenders look at your income on the amount of your debt, your employment history and how much money are haben.Obwohl in reserves for emergency your Credit score only is a factor in determining if your loan is approved, it is important, and it's one that can improve.

Under the fair and accurate credit transactions Act have a free copy of your Credit report annually from each of the three national consumer credit companies claim auf.Zentral at http://www.annualcreditreport.com established. Get your Credit score (one from each of the companies) for a small fee.

Your Credit score is a "snapshot" your credit history which change frequently. It can be called your FICO score, since the three national consumer credit companies use software to determine the score by Fair Isaac and company developed. FICO scores range from 300 to 850 and the higher the score the better your chances of credit.According to MyFICO (a division of Fair Isaac and company) http://www.myfico.com integrates the national average 723.Dies doesn't mean is that if your Credit score is lower than the national average, you are not a homeowner. There are many loan programs available to allow the lower Credit score s. You can a higher interest rate on your mortgage numbers, but achieve the American dream of owning a home.

MyFICO says there are five factors, in calculating your Credit score represents 35% of the number verwendet.Ihr payment history. This is followed the amount to owe the 30 percent. The length of your credit history is 15 percent your FICO score and a new loan and the types of loans that use 10%. Knowing these factors help to improve your score.

Your payment history makes the most of your FICO score.Want your score to improve, which, how easy it can be to pay your bills on time. If you have missed payments, catch.In the course of time this will be your score verbessern.Je longer you pay your bills on time, the better your score.

A factor in determining your Credit score is the amount of debt you actually versus loan amount debt that will give you steht.Daher available payment your obligations your Credit score improve. She want, because you show well more credit available than you actually verwenden.Zahlung debt, while the paid debts actually close your score may violate not to close your unused credit cards.

To determine a credit history, you need at least a piece of Credit report-Ing for at least six months.So if you find that you need no Credit score, you find a way for the various credit card scams to see credit for a period of six months to schaffen.Obwohl must credit cards available to meet this need, is, it backed up.

Because your Credit score is a"snapshot," t0o opening many new accounts in a short time your Credit score is verletzt.Dies by age of the average account is reduced caused by all newly established credit.

If you credit (i.e. mortgage, auto loan or credit card number request) the company will be your credit report betrachten.Dies is called a credit request.Although too many credit inquiries can lower your Credit score, open new credit and pay for it in good time the overall score improve.You your own credit card, check, as long as you obtain your Credit report from an organization authorized credit report s of consumers, not your Credit score affects.

It is better to have credit cards and pay a mortgage loan or large rate debts on time, to have seen at any credit überhaupt.Ein lenders more than a small Kreditkarte.jedoch all types of credit, including paid and closed accounts that are used in calculating your credit score.

If your Credit score is low, the best way to your chances of becoming is often a homeowner to increase debt to pay through your time, and for a period of Zeit.Je longer you demonstrate your ability and willingness to pay your obligations, the greater the chances that are able to reach the "American dream" home.

Jim Campanella is the operations manager of fresh start financial services, a mortgage broker in rolling meadows, IL.

Since 1989, Jim is in the State and national professional associations/trade organizations in the mortgage industry has been tätig.IM year 2004 Jim Campanella as mortgage broker operations manager of the year by the Illinois Association of mortgage brokers anerkannt.Er has spoken on a number of mortgage related topics from coast to coast.

Fresh start financial services is a licensed mortgage broker in the States of IA, IL, WI and comes in CO, loans IN and mo.In 2003 captures the mortgage broker as the subprime mortgage broker of the year of the Illinois Association of mortgage brokers.

Jim and his family make their home in Rockton, IL.

Tighter credit standards to create even more important to credit scores

In an effort to reduce the amount of them write every year the debt, he'd been tricked has tightened their restrictions borrowers since the recession of 2008. As consumers struggle to pay down their existing debt, many find that they are not qualified to take out a loan with no credit score high.

Understanding what to look for in a candidate he'd been tricked can help consumers, before applying for loans.Three factors play a major role for calculating credit scores: the payment history of the person, the size of all outstanding balances, and the length of a person's credit history. he'd been tricked to pay attention to some of these factors when you review your application.

By stay up-to-date with their credit card debt and other monthly payments, consumers build a solid credit histories, responsible. Additional points when borrowers must prove they are paying their way at the time.

FICO reminds that borrowers, marital status, age, employment history or rental housing, assistance, agreements, participation in the public consultation are not factored into credit scores credit.However, banks and preserve the right to request this information from borrowers as needed.

Tags: credit card debt, credit score, credit scores

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5 Common credit score myths

Your credit score is an integral part of your financial
life. It is important that you understand what it's all
about. Lenders, landlords, insurers, utility companies and
even employers look at your credit score. It is derived from
what's in your credit reports, and it ranges between 300 and
850.

Yet, according to a survey that was recently conducted,
nearly half of all Americans don't know how these scores are
derived or even what factors are used to come up with them.

For example, if your credit score is 580 you are probably
going to pay nearly three percentage points more in mortgage
interest than someone who had a score of 720.

Or another way of looking at it, if you had a $150,000 30-
year fixed-rate mortgage and your credit score was good
enough to qualify for the best rate, your monthly payments
would be about $890. This is according to Fair Isaac, the
company that created the FICO score and who the rate is
named after (Fair Isaac COrporation). If your credit is
poor, however, it is very likely that you would have to pay
more than $1,200 a month for that same loan.

With so much depending on the credit score, it's important
to understand what it is all about and what are the things
that affect it.

Unfortunately, people commonly have a lot of misinformation
and misunderstandings about their credit score. Here are
five of the most common credit score myths and along with it
the true facts:

MYTH #1: The major bureaus use different formulas for
calculating your credit score.

FACT: The three major credit bureaus - Equifax, TransUnion
and Experian -- give the score a different name. Equifax
calls their score the "Beacon" credit score, Transunion
calls it "Empirica" and Experian gives it the name
"Experian/Fair Isaac Risk Model." They all use different
names for the credit score, but they all use the same
formula to come up with it.

The reason that the credit score you receive from each
bureau is different is because the information in your file
that they base the score on is different. For example,the
records that one bureau is using may go back a longer period
of time, or a previous lender may have shared its
information with only one of the bureaus and not the other
two.

Usually the scores are not too far from each other. Unless
there is a big difference between what each bureau says is
your credit score, many lenders will just use the one in the
middle for the purpose of analyzing your application. So,
for this reason alone it is a good idea to correct any
errors that exist in each of the three major credit bureaus.

MYTH #2: Paying off your debts is all you need to do to
immediately repair your credit score.

FACT: Your credit score is mostly determined by your
past performance more than your current amount of debt. It
will definitely be very helpful to pay off your credit cards
and settle any outstanding loans, but if yours is a history
of late or missed payments, it won't remove the damage
overnight. It takes time to repair your credit score.

So definitely pay down your debts. But it is equally
important to consistently get in the habit of paying your
bills on time.

MYTH #3: Closing old accounts will boost my credit score.

FACT: This is a common misconception. It's not closing
accounts that affects your credit score, it's opening them.
Closing accounts can never help your credit score, and may
actually hurt it. Yes, having too many open accounts does
hurt your score. But once the accounts have been opened,the
damage has already been done. Shutting the account doesn't
repair it and it may actually make things worse.

The credit score is affected by the difference between
the credit that is available and the credit that is being
used. Shutting down accounts reduces the amount of total
credit available and when compared with how much credit you
can use your actual credit balances are made to seem larger.
This hurts your credit score.

The credit score also looks at the length of your credit
history. Shutting older accounts removes old history and can
make your credit history look younger than it actually is.
This also can hurt your score.

You generally shouldn't close accounts unless a lender
specifically asks you to do so as a condition for them
giving you a loan. Instead,the best thing you can do is just
pay down your existing credit card debt. That's something
that definitely would improve your credit score.

MYTH #4: Shopping around for a loan will hurt my credit
score.

FACT: When a lender makes an inquiry about your credit, your
score could drop up to five points. Some borrowers think
that if they shop around by going to a number of different
lenders that each time a lender does an inquiry it will
generate another reduction in the credit score. This isn't
true. For credit score purposes, multiple inquiries for a
loan are treated as a single inquiry, as long as they all
come within a 45 day period. So it is best to do your rate
shopping within this 45 day window.

MYTH #5: Companies can fix my credit score for a fee.

FACT: If the credit bureaus have accurate information,
there's nothing that can be done to quickly improve your
score if in fact you have a history of not handling your
debts well. The only way to have an effect on your credit
score is to show that you can manage your debts in the
future.

Also,if there are errors in your file, you can contact the
bureau yourself. You don't need to pay someone else to do
it. Each of the major credit bureaus has a website which
clearly explains what you need to do to correct an error.

So, the best ways to improve your credit score are: pay down
the debt,pay your bills on time, correct existing errors on
your credit reports in each of the three bureaus and apply
for credit infrequently.

Jack Black has helped a lot of people with credit score issues, including himself. So, if you are looking for credit score information, go to his Credit Score Resource website.