Credit Repair Blog

According to the latest Weekly Mortgage Applications Survey the number of home loan applications filed jumped 21% last week to the highest levels in six weeks as current mortgage rates stayed near 5%, Did you know that studies show that up to 70% of credit reports contain errors? In today’s economy, these inaccuracies can harm your credit score, cause you to pay higher interest rates and even put you at risk for identity theft. Bad credit mortgages continue to be difficult to find. Even hard money lending has disappeared.

Check your report today to spot errors and fix bad information so you can qualify for low mortgage rates that have reached record levels! You’ll also see your credit score which can change at any minute without warning. Banks are notorious for monitoring your credit score, waiting to hit you with incredibly high interest rates the second your score drops. Then you end up paying more in interest during times when interest rates are the lowest in decades! Remember, we offer a free credit repair evaluation.

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Getting advice about credit scores and credit repair can be complex.  Most reputable credit repair companies agree that there are no overnight credit fixes. Credit repair can be a time consuming process and it takes plenty of patience and determination. And the credit restoration company couldn’t be more right on when they say that the best way to take care of your credit is by being responsible.

Lexington is a law firm specializing in credit repair and they use their knowledge of the law and years of experience perfecting a proven formula to provide results while protecting your rights. They offer an account management system that is internet based.  Lexington has provided service to over 100,000 clients across the United States. It’s easy to get started on the path to better credit. We have changed our services recently and now offer several new products. When you sign up for either of Veracity’s credit repair services, we will provide a free credit report and score.

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A recent Washington Post article reported about some of the new risk based lending option happening with conventional and FHA loans.  Unfortunately very few borrowers are qualifying for home refinancing or bad credit debt consolidation loans.  Many debt loan applicants are migrating towards to bankruptcy and credit card debt settlement, because traditional home equity loans and consolidation mortgages are no longer available. 

According to US Debt Settlement Firm’s Jeff Morris said, “Thousands of Americans need to eliminate their debt and mortgage loans are no longer an option for consolidating debt unless the borrower has a ton of equity in their home.”  Morris suggests discussing your financial state with a trusted debt settlement company. After debt negotiations, credit repair becomes a viable option.

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To get the best mortgage rate on a home loan, or to qualify for the lowest rate for an auto loan or credit card, you need some new strategies to bump up your score – and keep it there.  Borrowing money today requires impressing an increasingly hard-to-please crowd. With creditors of all kinds more cautious than ever, you need an A+ application to land the best terms — and that means an A+ credit score, the number lenders use to judge your risk of default.  If your credit get hit you could be forced to take out a bad credit mortgage that carries a much higher interest rate. Consider credit repair solutions before seeking financing for a home car or business loan.

The most commonly used credit scoring system, called FICO, rates people from a very risky 300 to a pristine 850. And right now we’re in the middle of a credit score crunch: “You need a 750 or better today to have the same treatment you got with a 700 two years ago,” says John Ulzheimer, president of consumer education at Credit.com.

John D’Onofrio, CEO of Autoloandaily.com, seconds that: “Two years ago a 680 was enough to get a great car loan rate. Today it’s often the minimum to qualify at all.”  Think you’re still in the clear? Don’t be so sure. Lenders have been making changes that could cause your score to slip from excellent to average. Improve and protect your number with these strategies:

Know Your Credit Score. You have three FICO scores, based on your credit reports at the three credit bureaus: Experian, Equifax, and TransUnion. The numbers tend to be in the same ballpark, so pony up $16 to get one representative score at myfico.com. You can get an estimate free at Creditkarma.com. But the FICO score gives you a better sense of what lenders see. 

Look for Mistakes. Your scores are only as good as the information they’re based on. And a third of people who’ve pulled their reports have found errors, according to a Zogby poll. That’s good reason to read your report.

When you buy your FICO score, you’ll get a copy of the report it was based on. Get gratis histories from the other bureaus via annualcreditreport.com (you’re entitled to one free from each bureau every 12 months).

Spot an error? Request a correction, following the instructions on the bureau’s website. Let’s say the size of a credit line was misstated or an account was mistakenly marked delinquent. Getting the error fixed could raise your score as much as 200 points, says Ulzheimer, who has also worked for Equifax and FICO.

Never, Ever Be Late. As you’ll see in the pie chart on the right, the biggest chunk of your credit score comes from your payment history. Just one late payment can shave 100 points off a 750-plus credit score, says Ulzheimer. Lenders can’t tattle on you to the bureaus until you’re 30 days past due, adds credit expert Gerri Detweiler. But don’t risk it. For all your bills, enter recurring

Missed a payment? Get back on track within the next 30 days, and you should “get back the lion’s share” of points lost, Ulzheimer says. More than 90 days late? The damage can stick for years. If it was a one-off lapse, call your issuer and plea for a good-will adjustment to your credit report. (It’s a long shot.)

Remember the Magic 20%. The second-biggest factor in your score is how much you owe vs. how much credit has been extended to you. The part of this that’s easiest to finesse is your credit card utilization rate, or your total card balances compared with your total credit limits, as well as each card’s balance relative to its limit.

Example: If you’ve charged $5,000 on cards and have $50,000 in credit, your rate is 10%. For the best score today, 10% is ideal, but you can probably creep up to 20% and keep a high rating.  Unfortunately, with banks lowering credit limits and canceling unused cards, it’s harder to maintain such a low percentage. In the previous example, if your available credit is cut to $20,000, your rate shoots to 25%. That could sink your sc

Already above 20%? Paying down debt is the obvious way to lower your utilization rate, but another strategy is to apply for an additional credit card to increase your overall credit limit. That may cause you to lose a few points in the short term — so don’t do it if you’re about to apply for a mortgage — but it should pay off in the long run.

Keep Oldest Cards in Play. As noted, credit issuers these days are eagerly canceling cards that are not in use. Besides reducing your limit and increasing your utilization ratio, having an account closed can hurt you in another way, especially if it’s among your older ones.

See, 15% of your score rides on the length of your credit history. The longer you ably manage revolving debt, the better you look. So don’t cancel your oldest cards. And don’t let them get canceled on you: Move a recurring charge to each so they stay active.

Accept Fate on the Rest. There are other factors involved in your score, but they’re not so easy to manipulate. For example, 10% is based on how well you manage a mix of credit types, such as mortgages, car loans, and credit cards. But you don’t want to go out and, say, finance a car just for a score boost; besides, you can easily get 750-plus with just a few well-tended credit cards.  Along the same lines, 10% is based on “new credit,” but the effects of a new application can be positive or negative, depending on your history. Read the original article online.> 

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A recent Bloomberg article considered the credit crunch and FICO scoring for credit reports from a different perspective.  They considered the credit cards of Wayne Brown and how if he reduced his credit card debt, American Express would cut his credit limit to the amount of the new balance. If he doesn’t make a big payment, his interest rate may skyrocket.  The credit limits on Brown’s cards have been lowered, which has raised his debt relative to his available credit. This so-called utilization rate is a key factor in determining credit scores  Brown, a 58-year-old construction-company owner in San Diego, has seen his score drop to 650 from 760 the past 13 months.  “Interest rates on all of my cards are going up now, and my minimum payments are almost doubling because it looks like I’ve maxed out my cards,” said Brown, who uses credit cards to fund his home-building company.

About 45 % of U.S. banks reduced credit limits for new or existing credit-card customers in the fourth quarter of 2008, according to a Federal Reserve January survey of senior loan officers. Financial institutions may slash $2 trillion in credit-card lines in the next 18 months, Meredith Whitney, a former Oppenheimer analyst, wrote in a Nov. 30 report.  “You’re no longer immune if you have good credit,” said Curtis Arnold, the founder of CardRatings.com, a Web site that reviews credit cards. “The issuers hold the cards, literally.”  Debt settlement and bankruptcy rates continue to soar as credit card defaults are rising like home loan foreclosures.

Credit-card issuers such as American Express, Citigroup and JPMorgan Chase have cut credit limits to guard against risk and prevent delinquency and charge-off rates from increasing, said Arnold.  The average charge-off rate, reflecting loans the banks don’t expect to be repaid, was 7.1% in January, compared with 4.6 % a year earlier, according to data compiled by Bloomberg.

If credit-card limits are decreased, consumers should pay off balances as quickly as possible  consider making online payments before the monthly statement arrives to reduce debt, and weigh transferring balances to a card with a lower rate, said Jeff Blyskal, a senior editor of Consumer Reports.  He said consumers should beware of low-intro rates and high fees when transferring balances.

Cardholders will damage their credit history if they cancel an older account and lose the available credit on that card, said Emily Peters, personal-finance expert at consumer Web site credit.com. Credit-score companies look at the total amount of debt relative to credit limits on all credit cards when evaluating scores.

American Express, the largest U.S. credit-card company by purchases, is offering $300 to some customers if they pay their balances in full by April 30 to reduce the risk of credit card defaults.  Chase increased the minimum payment to 5% from 2% for certain borrowers with large amounts of revolving debt. According to Bill Hardekopf, chief executive of LowCards.com, a Web site that compares the rates of almost 1,100 credit cards, Capital One increased the interest rates for new customers on 15 cards.

In 2008, Chase decreased credit lines or closed accounts totaling $129 billion, Gordon Smith, JPMorgan’s chief executive of card services, said last month. Home equity credit lines to new and existing customers were increased by $107 billion, Smith said.  Critz George, a retired nuclear engineer and physicist in Albuquerque, N.M., said he had three Chase cards and one Citibank card closed because of inactivity, without advance notice. George, 71, said he fears having four lines of credit closed will lower his credit score.  “I feel like it was an arbitrary and capricious decision because I have paid in full and on-time for the last 20 years,” he said.

Brown, who is also a mortgage broker, said he was always careful to keep his balance at one-third of the limit. He said the reduced credit limits on his American Express and Bank of America cards have made that impossible.  “I’m angry because I’ve always been proud of my credit history and now it’s gone to hell, not because of something I’ve done.”  Read complete credit crunch article >

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Modifying mortgages to make them more affordable for struggling borrowers is a cornerstone of the Obama administration’s housing rescue plan. It allocates $75 billion for an initiative that would reward loan servicers for lowering mortgage payments for five years, after which they would rise to today’s current mortgage interest rates which, fortuitously, are in the low 5% range.

By now, most homeowners understand that a foreclosure judgment is a “significant ding” that will reflect in the credit score and perception of manual underwriting for many years to come.  Being late on your mortgage payments is a serious issue, but if you or your loan modification company are already negotiating with your lender, it certainly doesn’t hurt to attempt to get the lender to remove the delinquencies. It’s amazing how powerful a letter from the creditor says that they “made an error in reporting.”  But several readers recently wrote to Lisa Sitkin, in an effort to get clarification on the impact of loan modification and the long standing credit implications.  If the lender doesn’t agree, consider credit repair. 

Lisa Sitkin, a staff attorney with Housing & Economic Rights Advocates in Oakland, was kind enough to take a crack at answering that question. Here’s what she wrote:  Our view is that a loan modification that included a principal reduction might be reported as a write-off of some sort. Home loan modifications without a principal reduction (which will be the case in most borrower’s loan workouts) should not be reportable, but that is not a guarantee it won’t be. Credit reporting is something borrowers should be asking servicers about as they discuss lower mortgage rates. They should also request that prior past-due derogatory comments on the credit reports be changed to reflect new current status after the mortgage loan modification.

Sitkin suggests checking with an attorney with debt collection and/or fair credit reporting expertise for more insight on this issue; there is an attorney directory on Naca.net.  See the full article >

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If you have considered debt relief solutions like debt settlement or debt negotiations and still believe that a bankruptcy is your only option, then do research on what type of bankruptcy is available with your qualifications. There are basically two types of bankruptcy that consumers typically file. Chapter 13 bankruptcies are generally filed when able to continue your monthly obligations you will have what is called a “reorganization” which basically gives you three to five years to pay off the past balances without harassment from debt collectors. Chapter 7 bankruptcies are filed when you have no means to pay off or reorganize your debt. If you have any assets that are not exempt they will be sold or turned over to your creditors by a court appointed trustee.

When you file for bankruptcy you can expect the damage to your credit report to last for several years as this negative mark can show as long as a decade. Understand that in most cases you will be unable to get approved for any form of credit or loan during the first few years due to the perceived capability to repay a financial obligation. In short when it comes to your credit bankruptcy is by far the most damaging form of debt “relief” options available to you.

If your credit card debt has reached the point where bankruptcy is an option you have probably already traveled the road filled with harassing phone calls, messages and letters from debt collectors. While filing for bankruptcy will put a stop to that form of harassment you might feel a different backlash from the stigma of bankruptcy. As previously stated by reorganizing or discharging your debt you will have the opportunity to rebuild your credit while living debt free, however once you file for bankruptcy it stays with you forever. Having a BK on your credit report can may make it difficult to rent property or find a job as future mortgage lenders or employers can ask if you have every previously filed for bankruptcy. However, credit repair can help restore credit and boost credit scores a lot quicker than was possible just a few years ago. Read the original article.

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The average interest rate for a 30-year mortgage dipped below 5 % last week, a level not seen since the Eisenhower administration. Not surprisingly, homeowners are scrambling to commemorate this historic event by refinancing their home mortgages.  There’s just one problem: In this credit-starved environment, even a five-star general might have trouble qualifying for a new mortgage. If you’re interested in refinancing, here’s what you’ll need:  Excellent credit

Chief economist for Lending Tree Cameron Findlay, says to get the lowest rates, you’ll need a FICO credit score of 720 or higher, says. To avoid surprises, you should obtain your credit score before you apply for a mortgage, says Nancy Flint-Budde, a financial planner in Salem, N.Y. Your credit score is based on information in the credit reports compiled by the three main credit bureaus: Trans Union, Equifax and Experian. You can order a free copy of all three of your credit reports once a year at www.annualcreditreport.com. You’ll have to pay for your credit score.

Once you’ve received your credit reports, check them for errors that could hurt your score. If your reports show late payments – and the information is accurate – the only way to achieve credit repair is by showing lenders that you’ve changed your ways, says Craig Watts, spokesman for Fair Isaac, developer of the FICO score. That will take time, because you need to demonstrate a pattern of on-time payments.  However, if your credit reports show large credit card balances, you can raise your score quickly by paying them off, Watts says. Your “credit utilization” ratio, which reflects the amount you’ve borrowed as a %age of your available credit, accounts for 30 % of your credit score.

Ideally, you should have at least 20 % equity, based on your home’s current appraised value, says Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage and consumer loan information. Most lenders will require an appraisal before refinancing your loan, and if the value of your home has dropped, you may be unable to refinance, or decide it’s not worth the trouble.

Homeowners with less than 20 % equity may still be able to refinance, Gumbinger says, but they’ll probably need to buy private mortgage insurance. Private mortgage insurance, which protects lenders against default, is no longer available in some markets where home prices have plummeted because insurers no longer want to take the risk, Gumbinger says. And even if you can get mortgage insurance, the monthly premiums will reduce the savings from refinancing.  Sadly, the millions of Americans who owe more on their mortgages than their homes are worth – known as being “underwater” – won’t be able to refinance. Those borrowers “really don’t have a lot of alternatives,” Findlay says.  FHA introduced a new program called Hope for Homeowners that was created specifically to help distressed homeowners refinance even if their mortgage is larger than the value of their property.

If you have a home equity loan or line of credit, you’ll probably need to pay it off before refinancing, says Bob Walters, chief economist for Quicken Loans.  Before a mortgage lender will refinance your first mortgage, it typically needs approval from the lender that holds your second mortgage. The lender with the home equity loan must agree to “subordinate” the loan, which means it will take second place behind the new first mortgage.  In the past, that hasn’t been a problem. But in the wake of the credit crunch, many lenders are eager to rid themselves of home equity lines and loans, which are considered a higher risk than 1st mortgages.

According to Bankrate, borrowers in high-cost areas may not qualify for the lowest rates, even if they have outstanding credit, lots of equity and no second mortgages. That’s because the interest rates for loans that exceed $625,000 – known as jumbo loans – have remained high. The average jumbo rate is 6.8 %, nationally, the lowest rates are limited to home loans of $417,000 or less. Those are known as “conforming” loans because government-sponsored mortgage giants Fannie Mae and Freddie Mac will buy them in the secondary market. That makes those loans less risky for lenders.  In years past, FHA home loans had been more conservative than Freddie Mac for setting loan limits, but since 2006, FHA has allowed mortgage loans as high as $729,750 for qualified borrowers looking to borrower against their home located in a high cost area.

In some instances, Freddie and Fannie also will purchase loans for up to $625,000. The rates on these loans, which Gumbinger calls “expanded conforming” loans, averaged 5.28 % last week, according to HSH.

Trouble is, expanded conforming loans are only available in some parts of the country – mainly New York, Los Angeles, San Francisco and Washington, D.C., Gumbinger says. In Boston, where there are plenty of high-cost homes, the expanded category only covers loans up to $465,750. Loans above that amount are jumbos, with jumbo rates.  Read the original article >

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With the current state of the economy it’s becoming increasingly difficult to qualify for a home loan — even if you have perfect credit. Daniel Rosen also known as the “The Credit Doctor” is a consumer advocate and author of America’s most popular credit repair software, “Credit-Aid Software.” Rosen has appeared on “The Tonight Show,” “Late Show” and “Good Morning America.” He encourages consumers to fight for their rights and to use the credit reporting system to their benefit.

So what does a person do if they have bad credit? “Hiring a credit repair business can be quite expensive,” says Rosen, “and few consumers realize they have the power to achieve the same results themselves.”

Rosen is teaching people how to work the system and repair their own credit — and he’s doing it for free. Rosen has a free eBook called “Boost your FICO Score in 7 Easy Steps” that you can download for free at www.creditdoctorsoftware.com. “Many people never check their credit scores. That’s like driving with your eyes closed. Your credit score affects not only whether you qualify for a loan and what rate you’ll be charged, but also whether you’ll be able to rent an apartment or get a job — employers can legally refuse to hire you based on a low credit score!”

Credit-Aid has been seen on CNN, A&E and HGTV and has received over 100 “5-Star” Ratings and “Editor’s Choice” awards. View video at:

“The good news is that most people can improve their credit. It’s not rocket science. You just have to know the rules — and how to bend them in your favor. The process is time consuming; which is where credit repair software can help. Software saves you hundreds of hours by generating credit dispute letters written by attorneys and guiding you the whole way.”  Read the complete article >

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