Understanding Credit and Building For Home Ownership

(I am not a credit expert. These are just my opinions and proven research)

The market is heating up and I wanted to re-post a previous blog from last year. Today I want to talk about understanding and building your credit. You must understand credit in order to build credit properly. In today's real estate market, I'm faced with potential buyers struggling to become homeowners however continuously blocked by credit issues. Although you cannot build credit overnight, you can establish good credit history within 6 months or what I call "good behavior" period.

Understanding FICO Scores:

There are several aspects to how a FICO score is determined. A score can range between 300-850; the higher the better. The goal is to get your score at 720 or higher however having all 3 credit bureau scores above 620 can get you into a home today. Just this week, I handed a new home owner the keys to her new home with a middle score of 616 so it can be done.

35 percent Payment History: "Having a long history of making payments on time and no missed payments on all credit accounts is one of the most important items lenders look for."

30 percent Amount Owed: "This measures the amount you owe relative to the total amount of credit available. Someone closer to maxing out all their credit limits is deemed to be at a higher risk of making late payments in the future and this can lower their credit score.

15 percent Length of Credit History: "In general, a credit report containing a list of accounts opened for a long time will help your credit score. The score considers your oldest account and the average age of all accounts."

10 percent New Credit: "Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries can represent a greater risk, but this does NOT include any requests made by you, an employer or by a lender who does so when sending you an unsolicited, "pre-approved" credit offer. Also, to compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry.

10 percent Types of Credit in Use: "Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered."

There are 3 main companies that collect credit information; Equifax, Experian and TransUnion. You can purchase all 3 scores and reports at www.myFICO.com for $40.00 and compare. If you find inaccurate accounts, submitting an online dispute request is a very common practice. Accounts less than 2 years old and/or over $500 must be paid and resolved PRIOR to you contacting a mortgage lender. Any late payments in the last 12 months are worth contacting the creditor to see what you can do to have removed.
If you have filed bankruptcy Chapter 7, you must wait 2 years and Chapter 13 wait period is 3 years before you may qualify for a mortgage loan. Repossessions have a 3 year wait period and rental history with an apartment complex must be clean for 12 months. And a Judgement must show paid. Contacting a reputable credit repair company such has Halo Credit Solutions to help resolve bad credit while you build NEW credit is the best route.
Tips to Building Credit: 


1. Apply for a credit card but apply for a credit card that you are likely able to meet all requirements. Before applying, do your homework by making sure the creditor reports to credit bureaus otherwise it defeats the purpose. 
2. Create a spending plan. Use a credit card for purchase however keep the balance under $25 or at least a balance that you know you can pay IN FULL on time. Not just minimum...IN FULL. Getting gas or a few items at the grocery store will do the trick.
3. Opening a SECURED card is a great way to build credit. Orchard Bank and First Premier Bank are my recommendations
4. You need 2-3 major credit cards. Reason: you can not have a dormant credit card. You must be able to rotate your credit every few months. Having a dormant account can harm your score as well.


I really hope this information will help you. I want potential home owners to walk into a lenders office with confidence and secure in knowing they will be approved for a loan. Debt to income ratio is a lending factor as well however the majority a denied loans are due to poor score. If you are in the Charlotte area, please do not hesitate to contact me for a FREE home owner consultation meeting. Contact me directly or join my FACEBOOK page:


Yolanda Hayes
www.soldbyyolanda.com
soldbyyolanda@gmail.com
704-839-6005

Home Buyers Seminar 1/8/11 Was AMAZING!! You Missed Out

HAPPY SUNDAY!!

A few weeks ago I blogged about an upcoming seminar for credit challenged buyers. We had a shocking HUGE turn out to the point of turning people away.

This was my first seminar of 2011. If you missed it due to popular demand, I will be hosting another one in February. This program is so unbelievable that skeptical buyers openly spoke up saying this was too good to be true. Well...IT'S TRUE and they heard it directly from the creators of the "Game Plan" program.

What is the "Game Plan" program?

A program for credit challenged buyers that provides FREE tools, support and assistance to help you gain a part of the American dream. When you are partnered with a preferred lender and FREE credit repair counselor, your BRAND new home will be built by True Homes Builders. YES!! That is correct...I will be your preferred realtor and help you select one of True Homes communities, floor plans and watch your dreams of becoming a home owner come true. This program ranges from 90days-10months depending on your starting credit score.

How it works?

-Must have a credit score of at least 560 to join the program. If you do not know your current score, you can go to www.freecreditscore.com
-Must use the preferred lenders with True Homes AND follow their custom plan created just for you.
- $500.00 refundable deposit to really show the builders that you are very serious and not wasting their time...the $500.00 can be placed towards your closing cost.

IT'S REALLY THAT SIMPLE!

Contact me at soldbyyolanda@gmail.com to be added to my guest list for the February seminar. I understand that this program sounds to good to be true so join me for a FREE information presentation to help ease your mind. I'm available to answer any questions you may have about home buying and/or this program. Don't miss this opportunity because I may not be able to host another event like this. I can only provide you with the tools and education of home ownership, it's up to you to utilize the information. Until next time...

Do You Need More Space For A Growing Family But Have a Low Credit Score?

Hello and Happy New Year to all my readers!

      I have a reputation of assisting buyers that never thought they could own a home. Every buyer that followed my home buyer plan, stayed on track and worked with my team of professionals are all homeowners TODAY. A few prospects felt that my plan was too tough for a committment but a year or 2 later I'd receive a "help" email out the blue. Everyday I'm faced with renters that continue to rent because of their credit score. A low credit score does not equal RENT. Look, can I be honest? Being a home owners is not for everyone. There are 2 types of people: 1) Responsible adults that pay their bills 2) Irresponsible adults that choose not to pay their bills. Which one are you?

Your credit score determines your future. Having a positive credit score allows you to have the better things in life. Yes, there are people with low scores because they lost their job, medical reasons or divorce. For those potential home buyers that want to own a home for about the same price as their rent, call me!  With a credit score of 560+ and ready to commit to becoming a home owners in 2011, there is a program that can have you in a home within 10mths or less.



On  Saturday January 8, 2011 I will be hosting a FREE homebuyer informational class 1-2pm at my University office. True Homes Builder and I will be presenting the "Game Plan" program that allows you to select one of their many communities and floor plans while building your credit score. THAT'S RIGHT! While you work with a professional loan officer and credit counselor, your BRAND NEW home will be built. Opportunity is knocking for buyers! Call me at 704-839-6005 or email me at soldbyyolanda@gmail.com to be added to guest list. http://www.soldbyyolanda.com/

$8000 Tax Credit Reminder

You’ve decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here's what you have to do to get your benefit:

Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract by April 30, 2010 and close by July 1, 2010.


Decide whether to:
apply the credit to your 2009 tax return, filed on or before April 15, 2010;
file an amended 2009 return; or,
apply the credit on your 2010 return, filed on or before April 15, 2011.


Buyers purchasing in 2010 will have the option to:

Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
File an amended return for 2009 if their purchase is completed after April 15, 2010; or claim the credit on their 2010 tax returns.

How To Increase Credit Score

This week topic is going to circle around credit score aka beacon score aka FICO score. Those of you that know me hear me preach over and over again about how important it is to increase your credit score. The world we're in will make or break you if you have a poor score and this is coming from someone that has a score over 800...yeah, that's right and don't hate because you can be there too Most of you already know the 3 credit bureaus that keep our financial records are TransUnion, Equifax and Experian and based on the information reported, your FICO score is created. FICO scores are range between 300-850 so please find out what your score is http://www.myfico.com/ . This score is based on 5 primary factor:

* 35% is based on payment history
* 30% is based on the amount of credit you have used
* 15% is based on the length of your credit history
* 10% is based on the mix of credit
* 10% based on the new credit you've opened

There are several smart ways to improve your FICO score

1. Pay Your Bills On Time Since the largest component of your credit is the payment history, you must pay on time. Even if you can only pay the minimum payment, that's better than no payment at all because a late payment over 30 days or more can bring your score down 50 pts or more
2. Don't Max Out Your Credit Cards Most people feel that if they pay their bills on time each month and only pay the minimum that having a high balance will not effect their score....WRONG. Having a balance too high will mark you as a potential risk of financial trouble and give the impression that you may not pay your bills on time. Basically, try to keep your credit card balances under 30% of your credit line ex: if your credit line is $10,000 you should not allow your balance to go over $3000 Solution: have approx 2-3 credit cards, spread out your debt...if one card is getting out of control and reaching that 30% line, start using another card while paying down the others
3. Only Apply For Credit Cards When you Need Them Simple, just because you get a pre-approved application in the mail does mean to apply. You should have no more than 3 major credit cards Opening department store credit cards, gas cards etc can be reported as "bad" forms of credit...DON'T TAKE THE BAIT just to get 10% off those shoes. Say No and just use major credit cards Visa, Mastercard, Discover etc

Well, I hope this information help you guys because you'll be thinking about this email when you go to get that house you want and the bank offer you some outrageous interest rate because your score is not up to par. If you follow these steps, I promise your score will increase and don't forget to forward this email to friends, family and co-workers that are looking for a realtor...I'm here to educate and provide you with the best customer service. Take care and my contact information is below Thanks!!

When Buyer's Don't Listen...

Good morning everyone!! Today I've decided to post a quick story where I was working with a couple (buyer) and their credit score wasn't too good. To be honest I was quite shocked that they were able to get proved... Anywho, I advised them not to do anything to possibly disturbed their credit score during the home buying process because most lenders will run your credit again right before closing.

Needless to say...they did not listen. Not only did they not close they also lost the $1000 earnest money they put down to hold the property because the fault was on them. Listening to a family member that has no background in mortgage lending nor credit repair advised them to increase their score by opening a new credit card...they did. And they went crazy with it....spending almost up to the max limit. WOW!! Of course they asked me to bail them out??? What can I do!?!? I advised you not to do anything that may fluctuate your credit when I have over 8 yrs of credit enhancement experience. Now they are living in his fathers basement with 3 kids

On the good side of things...I just got a call from another buyer I'm working with the DID listen to my advise by building her credit up before meeting with a lender. I started working with her January 2009 and her score is already up 24 pts.

If you're in the Charlotte area....contact me for your real estate needs or questions about relocating to Charlotte 704-839-6005