Credit Repair has become a very hot topic since the US Bankruptcy laws have changed.
Hundreds of credit repair agencies have popped up all over the country and on the Internet. Is this because so many people want to help you?? Can there really be that many who are interested in helping you with credit repair?? What?s a good credit score anyway?? If you had a credit report in front of you, would you know what you?re looking at?
Sadly, financial responsibility is not taught to our children in school. By the time our children reach their late teens they already have offered dozens credit cards. Many take the bait and end up with credit problems before they get married.
This article is designed to help you see that if you?re in need of credit repair, you can do it yourself and save thousands.
A FREE CREDIT REPORT, REALLY??
The very fact that you see lots of commercials on cable TV offering FREE CREDIT REPORTS should tell you something. It?s all about big business folks!! Profits are to be made helping people with their credit repair. Hold the phone!! You can do this yourself and save thousands of dollars.
When you respond to the ads on TV or even online for a FREE CREDIT REPORT you?ll find a few surprises when you get going. Many of them are offer a FREE CREDIT REPORT but you do not get the credit scores. You get a credit history which shows any blemishes etc. on your report. However, they charge you extra for the scores or they want you to sign up for a monthly credit watch service.
You see, it?s a FREE CREDIT REPORT alright, but to get the information you really need, like the scores, you have to pay for them. Then once you get the credit scores what does that mean??
WHAT?S A GOOD CREDIT SCORE ANYWAY?
Your credit score can range from 200 to 850. Lenders will usually give you home loans or car loans with a credit score of 500 and up.
However, the "golden" score is considered to be 720. 720 is the "magic" score for getting any type of credit including nothing-down home loans, loans with no income verification, home loans with an equity line included, etc. Want one of those car loans that have zero percent interest? Have a 720 credit rating.
If you don`t have a 720, try for a 660. 660 means you can get a "no income verification" loan, which is really helpful for self-employed people. You can also get a 5% down loan when purchasing a home with a 660.
If you don`t have a 660, try for a 621. If your ?middle score" is 621 or better, you can still get a no-income verification loan, a 10% down home loan, as well as other options.
WHAT ARE CREDIT GRADES?
Credit grades are the way mortgage/lender companies often grade your loan based on certain credit items. These items include payment history, amount of debt payments, bankruptcies, equity position, and your credit score. Here is a guide to help you estimate your credit grade. Remember this is only a guide. Many mortgage/lender companies have exceptions that may affect the outcome. These results may be stricter or more lenient depending on their guidelines.
A General Guide to A, B, C & D Credit Grades
A+ to A- Credit Grade:
Debt Ratio: 28/38
Maximum LTV Ratio: 95%-100%
Additional Requirements: Good/excellent credit grades during last 2 to 5 years. No bankruptcy within the last 2 to 10 years.
Mortgage: Credit Score 670+, 0 times delinquent within the last 24 months.
Installment Loan: Credit Score 660, 0-1 times 30 days delinquent within the last 12 to 24 months.
Revolving Credit: Credit Score 660, 0-1 times 60 days delinquent within the last 12 to 24 months
B+ to B- Credit Grades:
Credit Score: 620
Debt Ratio: 55
Maximum LTV Ratio: 75% to 95%
Additional Requirements: No 60-day mortgage lates. 24 - 48 months since bankruptcy discharge. Higher number of rolling lates may be allowed.
Mortgage: 2-3 times 30 days delinquent within the last 12 months.
Installment Loan: 2-4 times 30 days delinquent within the last 12 months.
Revolving Credit: 0-2 times 30 days delinquent within the last 12 months.
C+ to C- Credit Grades:
Credit Score: 580
Debt Ratio: 55
Maximum LTV Ratio: 75%-90%
Additional Requirements: 12 - 24 months since bankruptcy discharge. High "rolling" lates allowable.
Mortgage: 3-4 times 30 days delinquent within the last 12 months and 0-2 times 60 days delinquent within the last 12 months.
Installment Loan: 4-6 times 30 days delinquent within the last 12 months and 2-4 times 60 days delinquent within the last 12 months.
Revolving Credit: 4-6 times 30 days delinquent within the last 12 months and 2-4 times 60 days delinquent within the last 12 months.
D+ to D- Credit Grades:
Credit Score: 550
Debt Ratio: 50
Maximum LTV Ratio: 65% to 70%
Additional Requirements: Bankruptcy discharge within last 12 months. Judgments to be paid w/loan proceeds. Not in foreclosure.
Mortgage: 2-6 times 60 days delinquent within the last 12 months. Poor payment record with limited 90 day, isolated 120 day.
Installment Loan: 1-2 times 60 days delinquent within the last 12 months. Poor payment record with limited 90 day, isolated 120 day.
Revolving Credit: 1-2 times 60 days delinquent within the last 12 months. Poor payment record with limited 90 day, isolated 120 day.
E Credit Grades:
Credit Score: 520
Debt Ratio: 50
Maximum LTV Ratio: 50% to 65%
Additional Requirements: Possible current bankruptcy, foreclosure, stable current employment.
Mortgage: Poor payment record with a pattern of 30, 60, and 90+ lates.
Installment Loan: Poor payment record with a pattern of 30, 60, and 90+ lates.
Revolving Credit: Poor payment record with a pattern of 30, 60, and 90+ lates.
The figures shown here are estimates. When trying to figure your credit grades, keep in mind the following principles:
Other Things Being EqualWhen you have bad credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation and assets play a larger role in the approval decision.
Worst Case ScenarioWhen determining your credit grades, various combinations are allowed, but the worst case will push your grade to a lower credit guide. Late mortgage payments and bankruptcies are the most important.
Going Once, Going TwiceCredit patterns are very important. A high number of recent inquiries and more than a few outstanding loans may signal a problem. A "willingness to pay" is important, thus late payments in the same time period is better than random late payments as they signal an effort to pay even after falling behind.
WHERE DO WE GO FROM HERE??
If your credit scores are 660 and above, you?re in great shape. You should be able to buy a car or house and get the best interest rate. That?s great!!
If you fall into the category where your score is below the 660 mark, well you can buy an auto and a home but you?ll pay a higher interest rate. In the long run this can cost you thousands of dollars. Why should you pay that when you can do your own credit repair and save this money?
One time each year you?re entitled to request a free copy of your credit report, with scores, according to the Fair Credit Reporting Act. Go to www.annualcreditreport.com to get this FREE report.
It?s important that people learn how to get this FREE CREDIT REPORT with the scores, then learn to read them. We?re on a mission to help the public with this.
If credit repair is what you need to do, then you need a plan to follow. This article would be 20-30 pages if I outlined it here.
If you need a plan, feel free to click on the credit repair link below for additional information.
Mr. Ragan has been helping people become first time home buyers for several years. Using credit repair has become an important part of this.
Together with his wife, they are working to help more people realize their dreams of home ownership.
Article Source: http://EzineArticles.com/?expert=Jeffrey_Ragan
