With the new year right around the corner, that leaves you with precious little time to get your finances in order. Let’s explore a few tips that will help you get a jump on improving your credit score before the end of the year.

Grab A Fresh Copy

The first step is to order a fresh copy of your credit report from one of the major agencies. The Fair Credit Reporting Act allows you to access a free copy of your credit report once every 12 months. So, if you have not ordered a copy recently, it is time to do so. You can access this free service through AnnualCreditReport.com, which is a website recommended by the Federal Trade Commission.

Clean Up Anything Outstanding

Now that you have a copy of your credit report, it’s time to go through it, line-by-line. You should recognize every current and outstanding account in the report. Any balances owing should be in order and reflect how much you owe. It’s critical that you flag any mistakes or old debts that you have already paid in full. If you come across anything that shouldn’t be on your credit report, call the reporting agency to let them know. If necessary, they will assist you with challenging the issue.

Pay Down Those High-Interest Debts

The final tip is to prioritize your outstanding debts so that you can pay them off more efficiently. The essential debt payments are your mandatory minimums, which you need to pay to avoid being sent to a collection agency. From there, try to pay off your debts with the highest interest rates first. Getting these paid off faster means that over time, you’re spending less on interest payments. Moreover, you can use that extra cash to pay your debts down further.

The above are just a few of the action steps that you can take today to start improving your credit score. When you’re ready to discuss a mortgage for your new home, give our team a call. We will be happy to advise you on the mortgage offer that suits your needs, budget, and credit.

Filed under: Credit Scoring by Julie Woodward
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Due to recent changes in federal regulations, consumers are now allowed to freeze their credit free of charge. Prior to changes in these regulations, credit bureaus would charge consumers for freezing their credit. What does this mean, and why might someone want to do this?

Freezing Credit Restricts Access To Confidential Information

There are certain situations where consumers may need to have access to their credit reports. For example, they may be applying for a home loan or a car loan. There are other situations where consumers may not need access to their credit reports for an extended amount of time. In this case, it is possible to freeze the credit report to restrict all access. This makes it harder for hackers to access confidential credit information, preventing them from opening an account in someone else’s name.

Who Can Freeze Their Credit Reports?

All consumers have the ability to freeze their credit reports. Even some children may have a credit history, so it is possible for parents to freeze the profile of a child for a certain amount of time. This prevents hackers from stealing credit information regarding children as well. 

How Can Consumers Freeze Their Credit Reports?

It is relatively easy to conduct a credit freeze at any of the three major credit bureaus including Equifax, Experian, and Trans Union. All consumers need to do is request a credit freeze via a phone call,  letter, or an online request. The bureau has to comply, freezing someone’s credit report within one business day. Furthermore, consumers should be able to access free fraud alert services as well. That way, individuals will automatically be alerted if someone tries to open an account in their name. 

What Happens When Applying For A Loan?

If applying for a loan, consumers need to unfreeze their credit reports. Therefore, they should file a request with all three major credit bureaus. They will have to comply within one hour. Then, after the lender has the information he or she requires, consumers can simply request a credit freeze again. That way, they limit the opportunities of hackers who might be trying to steal confidential information and commit identity theft. 

Filed under: Credit Scoring by Julie Woodward
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Your FICO scores affect your interest rate when you’re buying a home (and contrary to popular belief, you can buy a home after a foreclosure or bankruptcy if you work to improve your credit).

What Are FICO Scores?

Your FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use your FICO score to find out whether you’re a big risk (and whether they’re willing to take that risk on you).

What’s a Good Credit Score?

Credit is scored on a big scale ranging from 300 to 850. The higher the number, the better your credit.
According to The Balance, here’s the breakdown on what interest rates you may qualify for based on your FICO credit score, assuming that you have a 10 percent down payment and meet all the lender’s other requirements:

• FICO Score of 600 to 640: + 1.625 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 7.5 percent.
  A $200,000 amortized loan at 7.5 percent would give you a monthly payment of $1,398.
• FICO Score of 560 to 580: +2.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 8.75 percent.
  A $200,000 amortized loan at 8.75 percent would give you a monthly payment of $1,573.
• FICO Score of 540 to 559: +3.425 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.3 percent.
  A $200,000 amortized loan at 9.3 percent would give you a monthly payment of $1,653.
• FICO Score Under 540 to 500: +3.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.75 percent.
  A $200,000 amortized loan at 9.75 percent would give you a monthly payment of $1,718.
• FICO Score Under 500: +6.25 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 12 percent. With a FICO of less than 500, you will not qualify for a 90 percent loan, but you may qualify for a 65 percent loan, therefore, you need to increase your down payment from 10 percent to 35 percent.
  A $200,000 amortized loan at 12 percent would give you a monthly payment of $2,057.

Are You Buying a Home in Port Aransas?

If you’re looking for a home in the beautiful city of Port Aransas, we’d love to help you.
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
While you’re here, check out our:

• All-in-one mortgage calculator
• Free homebuyer handbook
• Free eBooks about buying a home (and more!)

You can also check out:

• Port Aransas homes for sale
• Port Aransas condos for sale
• Port Aransas lots for sale
• North Padre Island homes for sale
• North Padre Island condos for sale
• North Padre Island lots for sale

Filed under: Blog, Buying, Credit Scoring by Julie Woodward
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If you’re like most people, your credit could use a little “brushing up” before you apply for a loan.
That’s perfectly normal, and you’re thinking along the right lines: the better your credit score, the easier it will be to get a good interest rate and more favorable terms from your lender. While this isn’t financial advice (you should talk to a financial adviser for that), it can give you hope when you’re working toward buying your own piece of the American Dream.

Bad Credit and Applying for a Loan

Having bad credit doesn’t disqualify you from getting a loan, but it can hurt your chances. It can also make it harder to get agreeable terms on a loan.
So what should you do?
Talk to a broker who focuses on helping people in situations similar to yours. There are a number of mortgage brokers who specialize in working with people who have bad credit, and your Port Aransas Realtor® may even be able to refer you to a local expert.

What Your Broker May Advise

Your mortgage broker may advise you to take a few steps to improve your credit, including:

• Opening a line of credit with a major credit card company. While you don’t need to start with a high limit, the key is getting a card and making timely payments on your account. This shows lenders that you’re responsible with your debt and that you’re “good for it.”
• Showing steady employment. When you’ve worked in the same place for a year or more, you’re showing lenders that you’re responsible, too.
• Save up at least 10 percent toward a down payment. If you’re willing to contribute to a home you want to buy, lenders can see that you’re committed and may be more likely to want to work with you.

Are You Buying a Home in Port Aransas?

If you’re looking for a home in the beautiful city of Port Aransas, we’d love to help you.
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
While you’re here, check out our:

• All-in-one mortgage calculator
• Free homebuyer handbook
• Free eBooks about buying a home (and more!)

You can also check out:

• Port Aransas homes for sale
• Port Aransas condos for sale
• Port Aransas lots for sale
• North Padre Island homes for sale
• North Padre Island condos for sale
• North Padre Island lots for sale

Filed under: Blog, Buying, Credit Scoring by Julie Woodward
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DISCLAIMER: This is not intended to replace financial advice; we’re not financial advisers. If you need financial advice, you should speak with a licensed financial adviser.
Can you buy a house with bad credit?
Let’s talk about what constitutes “bad credit” for the purposes of buying a home so you know exactly what you need to do if you’re ready to make the leap.

Buying a Home With “Bad Credit”

Typically when lenders refer to someone with bad credit, they could mean that the person has excessively high credit card debt, late payments, a bankruptcy, or a foreclosure.
The most obvious ways to improve your credit are to pay down your debt and make timely payments. As for bankruptcy and foreclosure, time is typically the cure.
What you can do is talk to a lender that specializes in helping borrowers with bad credit. Your lender can point you toward special programs that will improve your credit and show you how you can finance a home, even with a bankruptcy or foreclosure on your record.

Time Frames for Foreclosure and Bankruptcy on Your Credit Report

Before you assume that you have bad credit, order your free credit report from Annual Credit Report. Thanks to the Federal Trade Commission, everyone’s entitled to one free copy of his or her credit report every year.
A bankruptcy can stay on your credit report for up to 10 years. The farther the bankruptcy is in your past, the more favorably lenders may look at your credit profile.
If you’re using a conforming loan, you typically need to wait about 4 years after a bankruptcy or a short sale.
If you’re using an FHA loan, you must wait 2 years after foreclosure. The good news? After 2 years, you may qualify to pay as little as 3.5 percent down. If you’ve had a short sale, you’ll have to wait 3 years.

Are You Buying a Home With Bad Credit in Port Aransas?

If you’re buying a home in Port Aransas, call us at 361-563-7788 right away. Tell us what you’re looking for and we’ll help you find it.
In the meantime, browse our Port A real estate listings in some of the most popular communities:

Filed under: Blog, Buying, Consumer Tips, Credit Scoring by Julie Woodward
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For home buyers in Port Aransas and nationwide, credit scores can change low mortgage rates and alter home loan approvals.

Borrowers with high credit scores get access to lower mortgage rates, for example, and can find the mortgage approval process to be more smooth that borrowers with low credit scores.

If your credit score is low, here are some basic ways to help improve it. 

Get The Reports
Download an updated version of your credit report from each of the three major reporting bureaus — Equifax, Experian and TransUnion. The reports may mirror each other, but credit accounts — especially derogatory ones — sometimes don’t appear on all three. Ordering reports from all three bureaus is a safety step. Note that the credit bureaus each use different scoring models so your credit scores will vary.

Check For Errors
Yes, credit reports can have errors in them. Should you find any items on any of the three credit reports which, in your opinion, do not belong or are erroneous, contact the credit bureau regarding removal. Errors on a credit report must be addressed with each bureau individually. 

Pay Up 
Or, rather, pay down. Be diligent about paying down your credit card balances in order to lower the percentage of your credit line(s) in use. In general, aim for a 30% ratio or less. An added benefit of paying down debt is that it can lower your total monthly debt load, which can increase your maximum home purchase price.

For items which are harming your score, such as a 30-day or 60-day mortgage late payments, medical collection items, and/or judgments, consider writing a brief letter which explains the circumstance of the derogatory credit event. Such a letter won’t help your score to improve, but it can help your lender to make better credit decisions, which can aid in “exceptions”, if required.

Making even minor changes to an overall credit profile can yield measurable long-term results. It can also result in lower mortgage rates.

Filed under: Credit Scoring by Julie Woodward
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Black Friday is 3 days away. It’s the official start of the 2010 Holiday Shopping Season.

Sales are expected to top $111 billion this year and, already, businesses are vying for shoppers and their dollars. Newspaper circulars are getting larger, and in-store discounting is more prevalent.

But one discount that shoppers should think twice about is the popular “Open A Charge Card, Save 20%” promotion. The short-term savings may be tempting, but the long-term costs may be huge.

It’s because of how credit scores work.

According to myFICO.com, “new credit” accounts for 85 out of 850 possible credit scoring points, with new credit defined by such traits as:

• Number of recently opened accounts
• Number of recent credit inquiries
• Time since recent credit inquiries
• Proportion of new accounts to all accounts

These traits are negatives against a FICO score so with each new, in-store credit card application, a person’s credit score will fall. The fall will be especially pronounced for persons lacking credit “depth”, or who have made a disproportionately large number of new credit applications recently.

For soon-to-be homeowners, or would-be refinancers in Corpus Christi , credit scores are worth keeping high. This is because credit scores change the mortgage rates and/or loan fees for which an applicant is eligible.

As an illustration, assuming 20% equity on a $200,000 conforming loan:

• 740 FICO : No added loan costs
• 720 FICO : 0.250% increase in loan costs, or $500
• 700 FICO : 0.750% increase in loan costs, or $1,500
• 680 FICO : 1.500% increase in loan costs, or $3,000
• 660 FICO : 2.500% increase in loan costs, or $5,000

It’s expensive to have a low credit score — more expensive than the money saved by opening a card at the mall, anyway.

That said, if you know you won’t need your credit for a mortgage within the next 6 months, the risk of applying for in-store credit cards is likely small. But if you’ll need your FICO soon, consider paying for your gifts full price.

Filed under: Credit Scoring by Julie Woodward
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This week marks the start of the Refi Boom’s 7th month across TX ; rates have been falling since early-April 2010. Whether you’re looking to refinance or buy a home, however, know that not everyone will qualify for today’s low rates.

Mortgage approvals are primarily based on good income, good equity and strong credit, and, without all three, the best rates of the day remain out of reach. Now, you can’t always ask for a raise and equity is a function of the housing market, but you can do something about your credit score.

In this 4-minute segment from NBC’s The Today Show, you learn some credit basics to help propel your score higher:

• There’s no “quick fix” for credit. Time + Good Credit Behavior = Better FICOs.
• Pay every bill when it comes due. Even one late payment can damage your score.
• Don’t close old credit cards

Also among the segment’s advice is to stop worrying about whether rates have bottomed. Refinance today if it makes financial sense. Then, if, by chance, rates fall in the future, just refinance again.  Don’t be greedy, we’re told.

Filed under: Credit Scoring by Julie Woodward
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The company behind the popular FICO scoring model has published a “What If?” series for common, specific credit missteps.

If you’ve ever wondered how your credit score would be affected by a missed payment or a maxed-out credit card, now you can use a look-up guide to assess the probable damage.

As published by myFICO.com, here’s a few common financial difficulties and how they affect FICO scores.

Max-Out A Credit Card

• Starting score of 780 : 25-45 point drop
• Starting score of 680 : 10-30 point drop

30-Day Delinquency

• Starting score of 780 : 90-110 point drop
• Starting score of 680 : 60-80 point drop

Foreclosure

• Starting score of 780 : 140-160 point drop
• Starting score of 680 : 85-105 point drop

Not surprisingly, the higher your starting score, the more each given difficulty can drop your FICO.  This is because credit scores are meant to predict the likelihood of a loan default. People with lower FICOs are already reflecting the effects of risky credit behavior.

Also worth noting that the above is just a guide — your scores may fall by more — or less — depending on your individuak credit profile.  The number and type of credit accounts you hold, plus their respective payments and balances make up your complete credit history.

Read the complete report at myFICO.com.

Filed under: Credit Scoring by Julie Woodward
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