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Summary Good Credit
What Should YOU
Expect Here?
SUMMARY
Of This PAGE
Good credit saves $1,000s to a homebuyer via lower interest rates.
Pro tips to build your credit
or rebuild your good credit again
No good credit equals NO home buying.
How to quickly rebuild good credit after bankruptcy.
How to buy a house shortly after foreclosure,
Why and how to apply for a secure credit card and increase credit scores.
The importance of getting FREE annual credit report
Good credit saves thousands of dollars to a homeowner via lower interest rates.
How to rebuild good credit after bankruptcy.
How to buy a house after foreclose
Good credit makes or breaks you home purchase
You can lower your mortgage rates and save $1,000s
This post will layout strategies of how you will be able to cash in your good credit on your home buying opportunities
Top Factors To Achieve Good Credit
Here are the key factors to achieve a Good Credit:
Request your FREE credit records – at least once a year
Dispute and correct any inaccurate date in your credit records
Seek to elevate your Credit Scores – using the techniques and recommendations posted here
Understand FICO®: How it works and how it can impact you home purchase
Understand Debt-To-Income (DTI) ratio: How much you can owe compared to your income …and still be able to qualify for a mortgage loan
Understand Debt-To-Credit ratio: Lenders like that you use around 30% of you lines of credit
Delinquencies, Liens, Bad Checks, Late Rent Payments – they all hinder your home buying plans – you need to address them and start getting in the right – home buying – track.
Apply for a '“Secure Credit Card”
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Buying a Home After Bankruptcy
Bankruptcy is no question the deepest ‘bad spot’ and certainly the most damaging entry in your credit records.
A bankruptcy stays in your records for 10 years.
Most lenders will simply refuse to extend a mortgage loan all this period
However, if you follow the techniques and recommendations in this post, it is possible to find lenders who will be willing to give you ‘second chance’ as quick as 1 year after discharge
However, you need to be very proactive! Do the things that I prescribe here!
Do NOT wait for things to get better on their own, because they will not!
Rebuilding your credit after bankruptcy? Please see detailed entry
How To Build Good Credit (Or Rebuild After Bankruptcy) below
Buying a Home After Foreclosure
A foreclosure is almost as heavy in your credit records as a bankruptcy. However, there are a few less painful factors
A Foreclose stays in your credit records for seven years
After three years the doors to home ownership start to open – wide.
Like bankruptcy is possible that certain lenders will be willing to give you ‘a second look’ if not a second chance
Things can start brighten up even sooner – if you do the things I recommend here
Rebuilding your credit after foreclosure? Please see detailed entry
How To Build Good Credit (Or Rebuild After Bankruptcy) below
How Soon Will You Swing Back
To Good Credit?
How soon you will be to ‘swing back’ to good credit again will depend on your diligence on following to the ‘prescriptions’ pointed on this post:
Start with the request YOUR FREE Credit Reports
Dispute anything that you think is NOT accurate and anything that might be too old to be in your records
The Fair Credit Act gives You have the right to request your credit records – at least once a year
And that’s from ALL three credit bureaus: Equifax®, Experian® and Transunion®
Some states give you the right to request your credit record more than once
Georgia gives its residents the right to request their credit records twice a year
Continue to do so every year, even when you back in the up-swing
Here is the link to request your Free Annual Credit Report
BEST HOME BUZZ TIP: Please do NOT make frivolous complaints to the credit bureaus about something that could be in your credit records AND you know to be true and accurate. But always dispute thing that are not true and that are not accurate
Continue to request your FREE Annual Credit Report, even when you are back on the saddle!
Make sure to request for removal of whatever data that is inaccurate and/or outdated.
Do it as often as your state will allow.
Understanding Difference Between:
Credit Report Vs Credit Score
Now let’s understand the difference between ‘credit report’ and ‘credit score!’
Credit Report
It all starts with lender – gas station cards, department stores, car dealers, banks, credit union, major car and moto dealers (*1) – to name a few
Whenever you use any of these creditors AND whenever you ‘simply apply’ with them, they will ‘report’ to the credit bureaus
BEST HOME BUZZ TIP: (*1) Please be aware that many small creditors, like “car lots,” do not report to the credit bureaus at all.
There are three major credit bureaus: Equifax®, Experian® and Transunion® - those are the ones who will ‘govern’ your credit life
Whenever you have a credit activity – buy, pay or simply apply with creditors who are members of the credit bureaus – it is reported to the credit bureaus and that will be the makeup of your ‘credit records’
Credit Scores (FICO® SCORE)
Now, in come these two smart cookies Fair & Isaak who founded a company and they called it Fair & Isaak Co. …FICO® for short
The FICO® invented and registered (patented?) a ‘formula’ to calculate the strength of your ‘credit records.’
FICO® formula includes several items, such longevity of the account (how long you have it); Recency of your credit applications; debt-to-income ratio (how much you owe compared with your income); debt-to-credit ratio (how much you use of your line of credits: It should be around 30%)
Each of the major bureaus will apply the FICO® formula onto your ‘credit records’ in their files…
AND the resulting number will make your Credit Score for that credit bureau
Because there are three credit bureaus, then we call credit scores, plural!
But each will come with a different result – How could that be?!
BEST HOME BUZZ TIP: Explaining the difference in the credit scores. Not all lenders work with all three big bureaus and/or do not report 100% of your credit activities.
Therefore, you are bound to have ‘different results!’
That is what causes the scores to be different from one another
Different Credit Scores Mystery solved!
BEST HOME BUZZ TIPS:
Because of the discrepancies between the credit bureaus, mortgage lenders do not use the highest score, neither the lowest score:
Mortgage lenders use only the ‘Mid Score.’
Since the “Great Recession,” circa 2007 to 2009, the ‘typical’ mid score that mortgage lenders will accept to make a loan is 620.
Some lenders might be willing to go a bit lower in ‘conventional’ loan with a higher down payment… and a higher percentage rate
I’ve seen plenty of mortgage lenders that will require 640 mid score minimum in order to generate a loan
Georgia Dream down payment assistance (DPA) program does require 640 mid score
I also heard of some lender who are willing to work with some veterans and accept a mid-credit score as low as 500
Two Thumbs Up! Those brave men and women deserve ALL our unconditional support!
Besides with the VA Guaranty – there is little there to lose!
FREE Annual Credit Report: Let me introject one more key element: Many derogatory entries are old and outdated. AND yet some of the bureaus still haven’t removed them!
Thus, the importance to request your FREE Annual Report – explained above. At least once a year!
How To Build Good Credit
(Or Rebuild After Bankruptcy)
I can predict that in the beginning of your credit journey, 100% of your credit applications will be denied.
You are denied credit because the lenders do not have anything to evaluate you credit worthiness. You do not have a ‘credit record.’
You are unknown to the world of credit.
The same is true for those who, at one point had credit, but lost because your finance life went off the tracks because of bankruptcy or foreclosure.
Painful as it is, it was just ‘rough spot’ in your life.
Bad things happen to good people: You are bound to bounce back!
Don’t be ashamed and don’t carry yourself as you are guilty of something because you are not.
I know of at least two US Presidents who were bankrupt! …and were able to swing themselves back fully recover to good financial health!
Pick up your chin and let’s restart again – here in this post there some suggestions that can help to start your journey back to good credit – fully!
There is a brand-new shinning house for you at the end of the tunnel for you to enjoy with your family!
Be Proactive! It Depends On YOU!
So, here are some ideas that can get you started or rebuild your credit journey.
Gas stations usually are very accommodating to extend credit to people who are beginning their credit journey.
Use it to fuel and save that cash to pay the bill when becomes due – pay it in full and timely!
BEST HOME BUZZ TIP: Secured Line Credit!
Here’s one of my most valuable tips that I have for anyone looking to start a credit record.
OR, for that matter, to someone who wants to reestablish credit.
There are many credit card companies which cater to those beginning (OR reestablishing) their credit record journey.
It is called ‘secure line of credit’ because you send them a certain amount of money and they give you credit card up to that amount.
In other words, the credit they extend to you is ‘secured’ by the funds you have in their possession.
Now, mind you that these are nationally known credit card companies with impeccable reputation. Which is virtually zero possibility of you losing your money.
You can use the card anywhere and it looks the same as any other credit card.
No one will ever know the difference!
Some companies will accept start as low as $250.00. They will tell you what’s the minimum they will start at.
But definitely starting at $500 there are plenty to choose from.
Your card company start to report to the credit bureaus as soon as they receive your first payment.
Let The (Re)Building Begin!
Upon receiving your brand-new credit card make a small purchase: Hey reward yourself!
Typically, you will receive the first statement in 30-40 days and customarily, and it carries 25-30 grace period before it is due. As all credit cards do.
Make sure you know when each card closes its ‘billing cycle.’
Look at the statement closing date. Continue to make ‘small purchases’ after that date so your card has a steady stream of ‘reporting’ to the bureaus.
Make small purchases so you know that the bill will be manageable to pay.
Then continue to buy something small again in order to have that constant flow of ‘purchases reporting to the bureaus’ …followed by a constant ‘on time payment!’ notation on your credit records.
BEST HOME BUZZ TIP: If you do not have a payment due, there is nothing to report that month! 😉
BEST HOME BUZZ TIP: All major Credit cards do report to all big three bureaus
New Applications After 90 Days
After three consecutive payments, it is time for you to apply for credit to a major chain.
From this point on, apply only to companies that are national brands!
Probably 3 of those will be enough. Remember, too many inquiries bring your ‘scores down.’
If you applied AND received that gas station card, continue to use it AND pay timely so it is going to be another stream of ‘on time’ reporting in your credit records. “The more the marrier!”
Apply for one and again use it for a small purchase.
Make the first payment and wait another 60 to 90 days and apply for the second …and so on.
Pay in full, at first. You don’t want to carry balances.
BEST HOME BUZZ TIP: Debt-to-credit rule
There is also an important rule called ‘debt-to-credit’ ratio which says that you should not use more than 30% of a given line of credit. If you go beyond that your ‘credit scores’ will suffer.
So, do respect that rule – both now AND in the future.
That $500 line of credit would afford you no more than $150 max use every month… the $250 no more than $80!
You have to start somewhere!
New Applications After 90 Days
After three consecutive payments, it is time for you to apply for credit to a major chain.
From this point on, apply only to companies that are national brands!
Probably 3 of those will be enough. Remember, too many inquiries bring your ‘scores down.’
If you applied AND received that gas station card, continue to use it AND pay timely so it is going to be another stream of ‘on time’ reporting in your credit records. “The more the marrier!”
Apply for one and again use it for a small purchase.
Make the first payment and wait another 60 to 90 days and apply for the second …and so on.
Pay in full, at first. You don’t want to carry balances.
BEST HOME BUZZ TIP: Debt-to-credit rule
There is also an important rule called ‘debt-to-credit’ ratio which says that you should not use more than 30% of a given line of credit. If you go beyond that your ‘credit scores’ will suffer.
So, do respect that rule – both now AND in the future.
That $500 line of credit would afford you no more than $150 max use every month… the $250 no more than $80!
You have to start somewhere!
Invitation For Credit Card
(UNsecured) Application
However, I will be completely surprised if around the 120 -150 days mark after your first payment, you do not start to receive offers to apply to major credit cards …UNsecured this time!!
Your good work is starting to pay dividends! BIG time!
Choose the two which are promising more perks and/or offering the highest (unsecured!!!) line of credit.
BEST HOME BUZZ TIP: Do NOT apply to more than 2 (okay, three) and even so, always wait until the previous once start to report to the credit bureaus …around 60 to 90 days or so!
Disregard ALL the others! Always keep in mind – ‘too many inquiries will bring your credit scores down!”
Congratulations! Now you are known to world of credit!
…And you are well in your way to (re)build your credit record
BEST HOME BUZZ TIP: AND please always follow this ‘rule:’ ‘pay early; worst case scenario, on time!’
BEST HOME BUZZ TIP: By way these tips also apply to those who are stating over after a hardship period – like after foreclosure and or bankruptcy.
Best of luck in building your good credit records!
And ‘Two Thumbs Up’ for those rebuilding their credit! And for believing it is possible!
Good job!!! You are now in the upswing!
Is there anything you still need
to know about which is not in this Summary Good Credit page?
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