Several times a year I help numerous families with credit issues become first time home owners after they have been turned down by another lender.  I talk to people that try to take credit repair into their own hands, and more often than not, people damage their credit further by trying to fix it.  The whole scoring system is fouled up, confusing, and frustrating.  If you need credit advice I would be happy to set some realistic expectations and tell you what you need to do, and how long it may take to see improvement.

I can tell you exactly the right thing to do to dispute, update and correct (raise your score) your bureau. I once raised someone’s credit score by 80 points by in one day.  That happened to be my credit score.  One $20 medical collection made my score go from 700 to 620 in one day, about 6 years ago.  My doctor’s office heard an earful that day.  I was livid, because I was in the middle of a very important financial transaction.  They fixed that one right away.   I made one call, and the next day my score was 700 again.  Yes it can go up that quickly.   It’s not always that easy though.

I was able to help someone raise their score from 520 to 680 in 8 months.  Recently, I helped a homebuyer go from 560 to 680 in 60 days. Sometimes it takes a while.  What if you don’t have that much time?  I would recommend allowing me to obtain a copy of your bureau.  I’ll go over it and see if we need to bring in a professional.  I will only recommend one company to do repair for my customers.  That company is Credit Repair Resources, out of Cleveland.   Attorney staffed, BBB rating of A+, money back guarantee.  Find their information in my Ohio business partner directory.

Sometimes the only reason you are declined is because your income is out of line.  As a mortgage banker we have lenders that will allow higher debt to income ratios (DTI).  If your score and profile is strong, it is possible to have a 56% debt to income ratio approved on an FHA loan.   Maybe you need to reallocate debt, and get a consolidation loan, or refinance an auto loan or student loans.

If you want to talk about a declined application, improving your score, or reallocating debt, I would be happy to hear from you, call me at 440-666-6069, or click here.

 

Ohio bad credit mortgages

Can I get a mortgage with bad credit?
Yes, eventually, if you do the right things.  When? Well that depends. First, it depends exactly how bad.  By this I mean, what is your score?  Second, it depends upon the reasons and the recency of the bad credit.  It will be necessary to write a letter of explanation describing the events which attributed to the derogatory credit history.  Was the negative credit history was due to circumstances out of your control (reduced work hours, loss of employment by you or your spouse, or health issues)?  If so, you will have a much easier time obtaining approval.

Initially, the best service I can provide is obtain a copy of your credit bureau and scores, or view one that another lender has sent to you.  I will pull your credit bureau, and go over it with you.  If your score is below the minimum required, or contains issues that will prevent you from obtaining an immediate approval, I can help create a game plan to get you approved as soon as possible.  It only takes a few minutes to find out if I can help you obtain a mortgage in the next 30 days.  It’s possible that it may take some time, work and possibly money to straighten out your credit.   If your credit is good enough at this time I will get your income and employment information, and your asset information.  In the unlikely event that I cannot secure a mortgage loan for you at this time, and I know someone else who can, I will gladly refer you in the right direction.

I have been working with people on their credit for the past 13 years, and I know a great deal about how the scoring system works, what to do, and what NOT to do to improve your score.  It is a very discouraging experience to hear that a customer “has been working on their credit” only to find out that the money they spent (trying to improve their credit score) has caused their score to go down!  This occurs when people pay off older collections.  Do yourself a favor and don’t pay off any collections without first talking to someone who understands credit.   Sometimes simple adjustments can be made to convert you from a decline to an approval (or a 580 credit score to a 640).

If you have a poor credit profile, your best chance for approval is going to be FHA, OHFA, USDA, or VA.

 

Credit score myths, tips and facts

If you are trying to get a mortgage approval with a bad credit please read these bulletpoints: 

• The scores that you obtain directly through Experian, Transunion, and Equifax are not the same scores lenders will pull.
• Paying off your collections will not improve your score!!!
• Using your credit cards often does not raise your score, any more than someone who uses them once a year.
• Paying off your auto loan, student loan, or mortgage loan will not improve your score.  Usually your score goes down when you pay off an installment loan.
• You should not pay off one revolving account at a time to gain the best credit score results.  Paying all of them down equally will create a better effect in the short term.
• After 7 years, a negative item on your report will not necessarily disappear.
• Entering a program like Consumer Credit Counseling Services will not improve your score.  Your score will likely drop, initially.
• When a collection is sold, the original one will not automatically be erased.
• You need to contact the bureaus, not your creditors, every time you think there is a mistake on your credit report.
• Income has nothing to do with your credit score.
• Longer time on the job does not improve your credit score.
• The ideal balance on a credit card is ZERO.

This list could go on and on.  The biggest problem with the scoring system is that it is incredibly flawed.  The second biggest problem with the credit sysytem is that you can pull your credit score at 4 different websites and get 4 different scores, and then go pull at an auto dealership and a mortgage company, and NONE of the scores will necessarily match.

If you want to know your real score please go to www.myfico.com (if you are buying your score here search the internet for coupon codes) or contact me.

 

Minimum credit scores for Ohio mortgage approval

 

Ohio mortgages and major derogatory credit 

Mortgage approvals with collections
You may or may not have to pay off collections, and medical collections are usually disregarded no matter how old they are.
Underwriters make decisions based not on several factors. If you have great compensating factors within your application you may not need to pay off any collections. FHA’s only rule (not to imply lenders only rule) is that any collections which may become a judgment or a risk to title must be satisfied prior to obtaining an FHA mortgage. Many lenders simply set an individual limit or a collective limit (for example anything over $1000, or $5000 in total). The final decision is at an underwriter’s discretion. It is always important to remember that loan decisions are made on a case by case basis.
Do you have a lot of collections? Or do you have a few that directly relate to an isolated event or trouble spot in your past? Generally speaking, if you have nothing but collections you are going to get denied, if you have a few from the same time period and good credit history besides you will get approved.
Underwriters want a story. I write up a letter outlining event that occurred leading up to the derogatory credit and submit with my loan file. Often a good write up is the difference between approval and decline. Many lenders require each derogatory item to be explained in a detailed letter, signed and dated by the borrower (“I forgot” does not work very well).
The Bottom Line
A collection is minor in nature usually does not need to be paid off as a condition for loan approval, however, an underwriter, at their own discretion, may require collections to be paid. Some lenders simply have a maximum tolerance.

Mortgages and public records
Public records on a credit report may include information such as judgments, foreclosures, suits, wage attachments, bankruptcies, state and federal tax liens, and past-due child support. This information is reported by county, state, and federal courts to various  reporting agencies. The agencies retain the information in a credit report and use the information along with other relevant data to determine your credit score. Since public records reflect poorly on your rating, you’ll want to make sure that this section of your report stays spotless. Public records sections of a credit report will only include financial-related information. This information will remain on your credit report for seven years. However, if the record relates to bankruptcy, it will remain on your report for 10 years.
If you do have a public record, it’s important to make payments toward them regularly and make every effort to pay them off as quickly as possible. To some extent, having an aggressive plan to pay off such debts could mitigate the negative aspects of having a public record on your credit report. If you have further questions about how to deal with information on your public record, seek the advice of a trusted financial advisor or credit counselor. Also, many credit counselors recommend reviewing your report periodically to ensure accurate reporting of your credit history.
The bottom line on public records
Public records must be satisfied, withdrawn, or in a payment plan with at least 12 documented months of on-time payments prior to obtaining an FHA or conventional mortgage.

Mortgages after bankruptcy
Chapter 7
At least two years must have elapsed since the discharge date of the borrowers Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. Discharge date is when the two year clock starts. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.
Chapter 13
FHA will consider approving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee’s written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.
The bottom line
One year of on time Ch. 13 payments and court approval. Two years since discharge for a Ch. 7.

Mortgages after foreclosure
FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit. This does not include the inability to sell a home when transferring from one area to another. Extenuating circumstances include loss income due to loss of employment, loss of income through death, and heath issues.

Walking away
If you walk away from a mortgage, you have more problems than being approved for a mortgage. Seek legal advice prior to making the decision to do so. You could potentially have serious legal consequences that will follow you for a long time, and expose you to further legal nightmares.  It is very likely just walking away will prevent you from ever getting another mortgage.
The bottom line
Please get legal advice when dealing with a possible foreclosure!

 If you would like to discuss your particular scenario or have me analyze your credit and make helpful suggestions please contact me.

 

Helpful credit links