Friday, August 12, 2011

All in a days work

These past few days have been a blur.  A whirlwind of rate locks, paper trails, phone calls, text messages, follow-up, follow-through, under the gun, time is of the essence… pure unadulterated craziness.
And so I pause to take a breath
{Big inhale, Big exhale} a little yawn got caught in the middle of that.
I have mentioned before that I am a Home Loan Lender.  If you want to buy a house, or if you own a house and want to lower your payment by refinancing to a lower rate, or take cash equity out of your home and get a lower rate in the process…I am your gal.
So why the craziness, why the INSANITY?  When a 30 year fixed interest rate dips below 4% craziness and insanity naturally follow, so I have learned.  Phones ringing, texts dinging, papers flying, my printer slapped ink on paper with a vengeance, and I printed incessantly like I hated trees and thought they were stupid.   I arrived at work Wednesday morning at 9am not knowing that I wouldn’t be leaving the bank, and barely my desk, for the next 11 hours.  I see you right now trying to do the math, let me help you out.  I left work at a little after 8pm.
It was a long day, but I wouldn’t have known it because when you are busy like that time flies by.
In my job, and a lot as of late with the tornado, I realize that there is a general cloud of mystery surrounding credit.  So, I thought I might help you out a little bit.  Especially those of you who think your credit might not be that hot, or you want to buy a house soon.
Credit is a reflection of your ability to manage and repay your debts or financial obligations.  There are three credit repositories or bureaus, as they are called, Experian, Trans Union, and Equifax.  The credit score range is from 300-850, but honestly I have never seen below 400 and I have never seen above an 830 score.  If your credit score falls into the range of 850-720 you have been doing a great job of managing your credit, keep up the good work!  If your score is between 720-660, it has taken a few hits, but you aren’t too bad off and you will still be able to obtain credit, but usually at a higher rate because of the perceived increase in risk to the lending institution.  If your credit score is between 600-660, your credit needs work and there are most likely outstanding items on your report that need to be addressed.  If your score is under 600 it needs a lot of work, doable, but you may be unable to obtain credit the lower your score and if you do obtain credit they will really stick you with the rates.  I am not able to do a home loan if your credit score is under 600.  If your credit score is between 600-620 and you have really good letter writing skills and the circumstances which caused your credit to be that low were temporary in nature (medical, layoff, baby, etc…) then on occasion I can get a credit waiver.
In summary, if you have glowing credit, keep it up.  If you have radioactive credit, let me tell you a few ways to fix that.
1.       Be a good communicator.  Best defense is a good offense.  Communicate with your creditors, utilities, cell phone companies…anyone who reports to credit if you are delinquent, communicate if you are not going to be able to make your payment.
You would be surprised how often they are willing to work with you. Sometimes they will split your bill with next month’s bill, or give you a grace period to get it in by.  Sometimes they will renegotiate terms if you are in a layoff situation, so communicate and call them before they call you.
2.       Don’t be late on anything that reports to credit.
You have 30 days from the due date before it hits your credit as late.  Try to never be late to anything that reports to credit as this is a heavily weighted part of the creditworthiness formula.  Think about it, if you can’t pay DishNetwork $95 for a service that they provided you regardless of the fact that it was a shared utility with a bump on the log loser of a roommate…why would I want to lend you $100,000 or $200,000 to buy a house?  Lenders, investors, everyone wants to know that they will get paid back, and that they can make a little money in the process.
3.       Manage your money.
Money management makes up the next biggest chunk of why your credit is good, or bad.  Let me give you an example.  If you have a credit card and that credit card is maxed out, even if you are never late on a payment your credit score will suffer.  You need to try and keep your balances under 50% that carry over from month to month and ideally under 35%.  So if you have $1000 line of credit you charge it up to $1000 one month, pay it down to under $500 at least.

Credit is really easy to wreck, it is really hard to build back up.  If you have a derogatory item on your credit report it will remain there for 7-10 years.   The more time that gets between you and that derogatory item the less it will impact you, but it will still be there.
If there are items on your credit report that shouldn’t be there you should first contact the reporting party and ask them to provide you something in writing.  You then write a letter to the bureaus briefly explaining the error and ask them to remove it.  I have a template letter that I use to clean up credit I can forward to you if you are interested.  Two weeks ago by writing letters I helped a lady increase her credit score 80 points.  That was awesome.  One day I couldn’t give her a loan and three weeks later I could.  She was a tornado victim too, so that made it even cooler.
If there are collections on your credit, pay them, settle for less than the amount due (also called a charge off), or your other option is to ignore them and wait for them to drop off.  As a lender I like to see them gone, paid off, charged off, or enough time and distance between them that they have little effect then they concern me less.
You may be wondering how to know what is on your credit.  You get 1 free credit report a year.  The only legit website is anything else is a scam.  They will ask you a bunch of security questions, some of them are trick questions, but they use the information on your credit report to generate what to ask you.  They might say, at which of these addresses have you lived, and you never lived at any of them.  That sort of thing.  They want to make sure that it is you checking your credit.  This will allow you to get a copy of all three bureaus.  It will not contain your credit score unless you want to pay for it.
Another thing is credit inquiries.  I could go on and on, but why reinvent the is an awesome little blog I found that talks about credit inquiries and what to know about them.
If you are thinking about buying a house I look at credit, collateral (downpayment), job history, income, and debt to income ratios.  There are still a few loans out there that you don't need a down payment.  There are loans out there where you could have had a few gaps in your employment.  There are loans out there for you even if you don't make that much money.  Biggest factors for, and debt to income.  Those will kill a deal.
I hoped this information helps you.  It is not a hole that is too big that you can't get out of it if your credit stinks.  And another is not a reflection of you as a person.  You are so valuable.  Treasured by God so much that he sacrificed everything to cover our bad sinful credit as fleshly stinkers (spiritually speaking now), and robed us with rightous credit, that glows bright.
Lord, thank you so much for my job.  I love it.  Thank you that I am able to help people and that you have allowed me the opportunity to help a lot of people this week.  Thank you for keeping me strong and focused.  I love you so much.
Have a wonderful friday friends!

Ronda Honda

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