One of the single most important factors in obtaining a mortgage
is your credit rating / credit score(s). There is not one single
factor that dictates your credit score, however, the following
items have a significant impact: amount / number of outstanding
judgments and collections accounts; the number of late payments
over the past 36 months; the balance on revolving debt in relation
to the credit limit; the total amount of outstanding open debt;
the number of recently opened accounts; the number of inquiries
in the past 90 days; the amount of credit you have established
in the past.
A point
to note is that your local credit bureau is NOT the source
of this information. Thus, while we can fix your actual "credit"
in order to obtain a mortgage, these items will still remain
later on in life. In other words, the credit bureau does not
have the jurisdiction to permanently correct the data within
the repository. In order to PERMANENTLY fix credit problems,
you must contact the three (3) major repositories, TransUnion,
Equifax, and Experian, directly.
While
it is impossible to "fix" a damaged credit report
overnight, there are a number of things you can do to greatly
increase your credit rating over a 60 to 90 day time period.
Mis-Reported
Late Payments / Collections
Unfortunately,
there may be items that show up on your credit report that are:
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Not
your account at all |
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Have
been mistakenly reported as late (your payment MUST be
30 days late before they can report it as such) |
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Open
collections or past due amounts that have already been
paid (still showing up, but last reported some time ago)
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For example,
a collection account that was paid on 4/15/94 and still showing
up late on your credit report, although it hasn't been reported
since 3/94, is still affecting your credit rating.
In order
to PERMANENTLY correct this information, you must contact
all three repositories at the following numbers:
· TransUnion: (800) 888-4213
· Equifax: (800) 216-1102
· Experian: (888) 397-3742
It is
extremely important that you have all the information about
the account in front of you when you call in, including:
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Creditor
/ Institution reporting the late payment |
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Account
number that showed up |
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Amount
Past Due / Outstanding Collection / Date Reported Late
/ Date Last Reported |
When you
reach a customer service representative, let them know that
you have a dispute about items that are showing up on your
credit report and that you want them "PERMANENTLY
FIXED / REMOVED." If you have something that does
not belong to you, you want to file a "FORMAL DISPUTE"
that this account either does not belong to you, or that the
late payment was not in fact late. If the account does belong
to you, but you paid it off in the past, you want to let the
customer service representative know that you're not disputing
that this is your account, but that you paid it off and that
you want it to permanently show up as being a $0 balance.
**
Note that for every derogatory account, you must go through
this same process with all three (3) credit repositories,
otherwise, it may be fixed on one of them, but not the other
two. **
Outstanding
Judgments / Collections
If
there are past due items / open collections on your credit report,
it is essential that you get them cleared as quickly as possible.
Take the following steps to insure that they are sufficiently
removed:
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Track
down the institution that currently holds the collection
(they are sometimes transferred among agencies). |
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Call
the institution and negotiate a settlement amount. Most
collection agencies will accept 50% of the outstanding
balance in order to satisfy your account. |
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Make
sure you keep accurate records of phone numbers you called
and the representative you spoke with in case you need
to follow up with them. If at all possible, get their
direct extension numbers. |
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Once you arrange to make the payment, always be sure to
GET A RECEIPT to show the account has been paid in full.
This will save you time and hassle when trying to get
the data permanently removed. |
After
you have paid the account in full and received your receipt,
refer back to the previous section, "Mis-Reported Late
Payments / Collection," in order to get the data permanently
corrected on your credit report. When you're speaking with
the customer service representative at the credit repository,
be sure to supply them with the phone number and contact person
with whom you worked with so they can act quickly in getting
your credit rating corrected. This will alleviate hassles
and make the customer service representative much more eager
to move your request to the top of their pile of paperwork.
Again,
remember to call all three (3) repositories in order to get
your information corrected. Failure to do so will mean that
the information could still show up under one of the other
repositories.
Essential
Tips
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Remember,
inquires bring down your credit score, so only give permission
to pull credit when it is absolutely necessary. |
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Many
new open accounts will greatly lower your credit rating.
Open as little new credit as possible. |
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Too
many accounts with balances can lower your credit score.
If you have several credit cards with small balances on
them, consolidate them all into one credit card with a
higher limit and lower interest rate. |
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Credit scores are weighted heavily on your most recent
credit activity. In other words, a late payment 2 years
ago will not effect your credit score nearly as bad as
a late payment 2 months ago. Make sure you absolutely
make all your payments on time and allow no new late payments
or collections. |
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Treat
the customer service representatives pleasantly. Remember
that they are not personally responsible for making the
mistake. If you treat them with respect and understanding,
they will be much more likely to help you out. |
Conclusion
Once
you have completed all of these steps, the hard work is out
of the way. It typically takes 60-90 days for these changes
to be reflected in your permanent credit file. Once you have
made the final call to the third repository, mark your calendar
60 days out to give us a call back and we can verify what information
was successfully updated and review where you stand in getting
a mortgage.
If you
should have any questions about improving your credit rating,
please feel free to contact a loan specialist at (302) 698-4130 or E-Mail
Us.
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