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How To Improve Your Credit Score

Most improvements to your credit score will take place over time and require ongoing effort from you. The only true “quick-fixes” are to paying down debt and successfully disputing negative information on your credit report. Following are some actions you can take to improve your score:

Improve Your Payment History

• Always pay your bills on time. Late payments play a major role in driving down your score.
• If you have past-due bills now, get current and stay current.
• Contact your creditors as soon as you know you will have a problem paying a bill on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.
• If your situation is serious, see a legitimate, non profit credit counselor. Avoid the scam artists who promise a quick reversal of your credit problems.

Keep Debt to a Minimum

• Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down.
• Pay off debt, don’t move it around. Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
• Don’t close unused accounts, because zero balance might help your score.
• Don’t open new accounts that you don’t need as a quickie approach to altering your debt-to-credit-limit ratios. That can lower your score.

Length of Your Credit History

• Time is the only thing that can improve this aspect of your scores.
• Manage this wisely: Don’t open several new accounts in a short period, especially if your credit history is less than three years. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly. Also, if you have a long-standing account, pay it on time, and try to pay it down over time.

Manage New Credit Wisely

• Several credit inquiries during a short period means you are attempting to open multiple new accounts and this can lower your credit scores.
• Credit scoring software usually recognizes when you are shopping for a single loan within a short period of time, such as a home loan. If multiple inquiries are necessary, have them pulled as closely together as possible.
• Checking your own credit report does not affect your scores.
• Do try to open a few new accounts if you’ve had credit problems in the past. Pay them on time and don’t max out your credit limits.

Mix The Types of Credit You Use

• A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.
• Having many installment loans can lower your scores since payments remain the same until balances are paid in full.
• Don’t open new accounts just to have several accounts or to attempt a better mix of credit.
• Closing an account doesn’t remove it from your report and it may still be considered for scoring purposes.

Here to support your success,

Donna Sanford

Phone: 888 381 8654
Email

Real Estate Investor,
Short Sale Professional,
Real Estate Transaction Negotiator,
Real Estate Investing Servicer

Your Solution 4 Real Estate, Inc
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers.  We are professionals with a proven track record for achieving positive outcomes for our clients.  Call us now at 888-381-8654.

_______________________________________________________________________________________________________________________________________________________

About: Donna Sanford holds a BSE, MBA and has been an Executive Director of Engineering and Plant Manager in the Automotive Industry, both in the US and Europe.  She is a passionate business owner, real estate investor and entrepreneur focused in the Real Estate area.

How Is Your Credit Score Calculated?

Credit scores are calculated by plugging the data from your credit report into software that analyzes it and cranks out a number. The three major credit reporting agencies don’t necessarily use the same scoring software, so don’t be surprised if you discover that the credit scores they generate for you are slightly different.

Which parts of a credit history are most important?

Here is an approximate percentage value that each aspect of your credit report adds to a credit score calculation:

  35% – Your Payment History
  30% – Amounts You Owe
  15% – Length of Your Credit History
  10% – Types of Credit Used
  10% – New Credit

 Your Payment History Includes:

• Number of accounts paid as agreed
• Negative public records or collections
• Delinquent accounts:  1)total number of past due items; 2)how long you’ve been past due; 3)how long it’s been since you had a past due payment

 Amounts Owed:

• How much you owe on accounts and the types of accounts with balances
• How much of your revolving credit lines you’ve used — are you over-extended?
• Amounts you owe on installment loan accounts vs. their original balances — are you paying them        down consistently?
• Number of zero balance accounts

 Length of Credit History:

• Total length of time tracked by your credit report
• Length of time since accounts were opened
• Time that’s passed since the last activity
• The longer your good history, the better your scores (so keep your old accounts active)

 New Credit:

• Number of accounts you’ve recently opened and the proportion of new accounts to total accounts
• Number of recent credit inquiries
• The time that’s passed since recent inquiries or newly-opened accounts
• If you’ve re-established a positive credit history after encountering payment problems
• In general, checking to make sure you aren’t attempting to open numerous new accounts

 Types of Credit Used:

• Total number of accounts and types of accounts (installment, revolving, mortgage, etc.)
• A mixture of account types usually generates better scores than reports with only numerous       revolving accounts such as credit cards

 Credit scoring software only considers items on your credit report. Lenders typically look at other factors that aren’t included in the report, such as income, employment history and the type of credit you are seeking.

 What’s a “Good” Credit Score?

Credit scores (usually) range from 340 to 850. The higher your score, the less risk a lender believes you will be. As your score climbs, you are offered better (lower) interest rates.

Borrowers with a credit score over 700 are typically offered better interest rates and more financing options, but there are mortgage products available for nearly everyone.

Multiple Credit Scores

Your bank will pull credit reports and scores from all three major credit reporting agencies: Transunion, Equifax and Experian. They’ll probably use the middle score to work your loan application. Ask your lender to explain which credit scores will be used and how they affect your loan application.

Here to support your success,

Donna Sanford

Phone: 888 381 8654
Email

Real Estate Investor,
Short Sale Professional,
Real Estate Transaction Negotiator,
Real Estate Investing Servicer

Your Solution 4 Real Estate, Inc
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers.  We are professionals with a proven track record for achieving positive outcomes for our clients.  Call us now at 888-381-8654.

_______________________________________________________________________________________________________________________________________________________

About: Donna Sanford holds a BSE, MBA and has been an Executive Director of Engineering and Plant Manager in the Automotive Industry, both in the US and Europe.  She is a passionate business owner, real estate investor and entrepreneur focused in the Real Estate area.

Will Fannie Mae Lend To You?

Fannie Mae has begun tightening its lending, saying it is rejecting borrowers who have credit scores* below 620, even if they offer a 20% down payment. Also, the mortgage giant said borrowers who use 45% of their gross monthly income to pay debts are likely to e rejected.  The new restrictions went into effect in December.  Some lenders have already implemented similar standards.

 * A credit score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan. It is sometimes referred to as a FICO score (Fair Isaac Corporation created the software used to calculate the score).

Here to support your success,

Donna Sanford

Phone: 888 381 8654
Email

Real Estate Investor,
Short Sale Professional,
Real Estate Transaction Negotiator,
Real Estate Investing Servicer

Your Solution 4 Real Estate, Inc
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers.  We are professionals with a proven track record for achieving positive outcomes for our clients.  Call us now at 888-381-8654.

_______________________________________________________________________________________________________________________________________________________

About: Donna Sanford holds a BSE, MBA and has been an Executive Director of Engineering and Plant Manager in the Automotive Industry, both in the US and Europe.  She is a passionate business owner, real estate investor and entrepreneur focused in the Real Estate area.

Who’s Buying Houses?

A final look at 2009 from the National Association of Realtors Home Buyer and Seller Survey…

Buying trends:

• the housing market welcomed a bigger share of first-time buyers and single women, while a majority of sellers resorted to dialing down prices to get their homes sold.
• first-time buyers accounted for a record 47% of home sales last year, up from 41% in the prior-year period, according to the survey conducted by the National Association of Realtors. 
• home sales and prices showed some signs of stabilizing last year, and the survey results affirm the market continued to favor buyers, particularly first-timers.
• first-time buyers had a median age of 30 and reported a median income of $61,600, the survey shows.
• the typical first-time buyer paid $156,000 for their home, about $9,000 less than in the Realtor’s 2008 Survey.
• Repeat buyers were typically 48 years old with median income of $88,100
• Buyers generally took 12 weeks to search for a home, two weeks longer than last year, and they looked at 12 homes, up from 10 homes the prior year.
• Single women made up a slightly bigger share of homebuyers, accounting for 21% of buyers, a 1% increase from the prior year
• Single men accounted for 10% of the buyers while married couples accounted for 60%.
• the median down payment homebuyers made was 8%.
• more than 60% of buyers tapped into their savings to come up with the down payment while 22% received a gift from a friend or relative.
• 52% of sellers paid incentives such as closing costs.
• the typical home sold for 95% of the original listing price, however, sellers gained a median amount of $36,000 over their original cost.

  Tax Breaks:

• First-time homebuyers last year were able to take advantage of the tax credit of up to $8,000 that was meant to entice new homebuyers to enter the market.
• According to Paul Bishop, the trade association’s vice president of research, “Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time homebuyers into the market.”
• For 2010, Congress extended the tax incentive through June, as long as the buyer signs a binding contract by the end of April.
• For 2010, the program was expanded to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence for at least 5 years.

Here to support your success,

Donna Sanford

Phone: 888 381 8654
Email

Real Estate Investor,
Short Sale Professional,
Real Estate Transaction Negotiator,
Real Estate Investing Servicer

Your Solution 4 Real Estate, Inc
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers.  We are professionals with a proven track record for achieving positive outcomes for our clients.  Call us now at 888-381-8654.

_______________________________________________________________________________________________________________________________________________________

About: Donna Sanford holds a BSE, MBA and has been an Executive Director of Engineering and Plant Manager in the Automotive Industry, both in the US and Europe.  She is a passionate business owner, real estate investor and entrepreneur focused in the Real Estate area.

9 Frequently Asked Questions on Short Sales

1. What is a real estate short sale?
A short sale occurs when a lender agrees that it will take less than what the homeowner owes on their note.  The lender usually agrees to this during the beginning stages of foreclosure when the they realize that the homeowner will not be able to meet the terms of their agreement and will be foreclosed upon if a short sale does not occur. This short sale would result in a substantially discounted purchase price for the end buyer of the home. The buyer would then proceed with the purchase of the home when the lender agrees to a price.

2. Will a lender allow a real estate short sale when the seller has some a good amount of equity?
If the home has some amount of equity, the lender may choose to continue with a traditional foreclosure proceeding to regain title to the property and dispose of it at a fair market price. Short Sales are generally discounted below fair market value, because the time value of money makes it more viable for the lender to sell it quickly rather than waiting through the redemption period, which in some states can be 6 to 12 months.  Banks are not in the real estate business and generally don’t want to own the home.  

3. What documents are necessary to proceed with a short sale?
The individual documents necessary to proceed with the short sale will depend on the lender. Typically, the lender will require hardship letter detailing the circumstances leading to a short sale. A signed, valid purchase and sales contract, preliminary HUD-1 settlement statement and a preliminary estimate of proceeds to the lender. There may be additional requests for more detailed information on the financial condition of the seller, ie; pay check stubs, bank statements, a personal financial statement and monthly budget assessment, amongst other things.

4. Will the seller’s credit be affected if they agree to a short sale versus a foreclosure?
While it is up to the individual lender to decide what to report, what often happens is the loan will report as “paid” on their credit report for a short sale, and sometimes with a reference that says “settled for less than originally owed”. A foreclosure will show as a default and can affect one’s credit for 3-7 years.  It is absolutely less damaging to have the short sale referenced than to have a foreclosure on a credit report.

5. Will a lender allow the homeowner to make a profit on a short sale?
Absolutely not. The lender is taking a loss when they agree to a short sale and they will not agree to let the homeowner benefit financially.

6. If a seller is in bankruptcy, will that affect the short sale of the property?
Absolutely, as most lenders will not consider a short sale if the homeowner is in the middle of a bankruptcy proceeding. Negotiating a short sale between the parties is considered a collection activity and such a negotiation is prohibited during bankruptcy proceedings.

7. Will the bank or lender require an appraisal on the home in a short sale?
Most lenders will hire a broker to develop a Broker’s Price Opinion (BPO) to determine the value of the home. Some will require that a full appraisal be submitted in the short sale package. The lender will need some formal assessment of the value of the home in order to make a decision as to an acceptable offer.  Settling on an agreeable price usually requires some negotiating between the end buyer and the lender and this can be an iterative process.
 
8. Are there tax implications for the short sale?
Much like the issue of credit reporting, the circumstances vary by lender. As a short sale represents a loss for the lender, they can report the amount lost as “debt forgiveness” to the seller. If a formal tax form 1099 is filed, the seller may be responsible for paying taxes on the amount of debt forgiveness. A CPA should be consulted by the homeowner in this situation.

9. Why would a lender agree to a short sale?
The lender doesn’t want to own the home because they are not real estate experts.  Foreclosure proceedings can be very time-consuming and costly.  The seller is relieved of the home they can no longer afford. The buyer is purchasing the home at an attractive price. A professionally executed short sale can benefit all parties involved in the transaction.

Here to support your success,

Donna Sanford

Phone: 888 381 8654
Email

Real Estate Investor,
Short Sale Professional,
Real Estate Transaction Negotiator,
Real Estate Investing Servicer

Your Solution 4 Real Estate, Inc
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers.  We are professionals with a proven track record for achieving positive outcomes for our clients.  Call us now at 888-381-8654.

_______________________________________________________________________________________________________________________________________________________

About: Donna Sanford holds a BSE, MBA and has been an Executive Director of Engineering and Plant Manager in the Automotive Industry, both in the US and Europe.  She is a passionate business owner, real estate investor and entrepreneur focused in the Real Estate area.