Online Reports


To enhance your buying and selling experience, I am here to make this process as stress-free and rewarding as I can. Please access our free reports today!

List of Credit Reporting Agencies
This list from the CFPB (governement agency responsible for financial company supervion) is a list of the most common credit companies that keep information on your financial report agencies)
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Whats the big deal about good credit?


OK, so you have bad credit and you pay cash for everything.  So who cares if your credit is bad? The fact is that your credit history not only may keep you from getting a loan for a car or maybe even impact your ability to get a job. Just look at some of these examples below and good credit begins to look like a requirement for the good life.

  • Insurance premiums for your car, home, life and just about anything you can insure is impacted by your credit score. The worse your credit the more it costs. That means your working longer to get the same insurance value.
  • How about saving money on interest? Oh your cash only. What happens if you have faithfully saved for a big purchase. The day after you have made that purchase your refrigerator or car or roof on your house breaks or is damaged. Not enough cash to go around means you need a loan. Bad credit means high interest rates. That great deal you got can be eaten up in interest.
  • So now you have a credit card application. The higher the credit the higher the credit limit on your credit card.
  • Do you need to have utilities in your name? Your credit score can mean a big deposit amount. After all a business would want to reduce it's exposure to poor credit risk, who knows they may walk from a big monthly bill.
  • Looking at new homes? Many mortgage companies want credit scores of 640 minimum. The days of buying a house with credit scores of 600 or less are long gone.
  • Well don't buy a house rent an apartment or home. Most all rental properties want to have a prospective tenant to provide a credit check. High scores can help you qualify since a big number provides confidence to the owner.
  • How about a new car? Is your credit so bad that you need a co-signer. Will just anyone co-sign for you? Remember a co-signer is saying they will pay the loan if you don't.
  • Are you an entrepreneur? If you need cash for your new or old business, your bad credit may stand in the way of getting that loan that will save the business.

There are lots of good reasons to maintain your credit. Doing the most with what you have means keeping your credit in good condition. Call me at 623-606-8861 or email at mwhorton@ix.netcom.com  for more information.

 

 


What are the WORST mistakes to have on your Credit Report


Credit mistakes can follow you for years. Often in ways you may not see directly. The following problems shown on your credit report can hurt your scores, your lending credibility and even job opportunities. Do your best to avoid these problems.

  • Lawsuits or judgements - This is where a creditor sues you in court for a debt. If the judgement goes against you it can be on your report for 7 years from the filing date and stays on even if you satisfy the judgement.
  • Tax Liens - Non payment of taxes, even by accident can be very painful. The property is typically auctioned off (thorough foreclosure proceedings) by the responsible government. There may be ways to gain it back by paying penalties, but if not then you still have the mortgage to contend with. That does not go away and the lender may accelerate the loan to make it due and payable since you no longer own the collateral. An unpaid tax lien can be on your credit report for 15 years and a paid off lien maybe on for 10 years.
  • Foreclosure - Defaulting on your mortgage loan and having the home auctioned off at trustee sale may result you from limiting your ability to obtain new credit. This report will be on your credit record for 7 years.
  • Bankruptcy - The type of bankruptcy (Chapter 7 or Chapter 13 for most individuals) will hurt your credit score. Each account included in your bankruptcy will reflect the settlement on the credit report. This will stay on your credit score for 7 to 10 years. This does not seem to be as limiting as a foreclosure and individuals can begin rebuilding their credit after debt discharge
  •  Charge-offs - When you are late by more than 6 months your creditor may decide that the debt is not collectable and write it off as a loss. A charged off account can be reported to the credit bureau for 7 years. They may also decide to sell the charged off portion since it is not forgiven, to a collection agency.
  • Collections - A third party debt collector may attempt to collect payment from you. The results of the collection may or may not be reflected in your credit report. They may indicated on an entry on your credit report that your account is in collection status.

What to Check in Your Credit File


MSN had a recent article on what to check when you look at your credit file. It's not just looking for bad things (negatively impacting trade lines) but to make sure the basic information is correct and consistent between the 3 credit bureau reports.

  • List of all your employers and job titles for the last 2 years.
  • Correct address for your primary residence over the last 2 years.
  • Social Security Number is correct
  • Telephone number correct (this is for verification purposes and is very important to some lenders).
  • Make sure all the accounts that are paid on time are listed. Some lenders may not report regularly or maybe not all of the credit bureaus.

What you do can impact your credit score!


Your FICO score can be impacted by a lot of things. FICO has provided a general list that you want to avoid to keep from having big creidt score drops. Remember, that even if you have has a foreclosure or a short sale of your home, it is possible to recover your credit score over time unless you make one of the credit score NO-NOs shown below.

Money Problems Will Impact Your Score
Problem

If your score is

680

If your score is

780

Credit Car Maxed OutDown 10 to 30 ptsDown 25 to 45 pts
30 day late paymentDown 60 to 80 ptsDown 90 to 1010 pts
Debt SettlementDown 45 to 65 ptsDown 105 to 160 pts
ForeclosureDown 85 to 105 ptsDown 140 to 160 pts
BankruptcyDown 130 to 150 ptsDown 220 to 240 pts

 


Your Credit and Distressed Home Sale


I work with home sellers every day that are facing a distressed sale of their home... all of them have similar questions about how foreclosure or short sale can affect your credit scores. It depends on what your financial picture is before and during your distressed sale and if you are having a foreclosure or will you short sale your home. In either case, it will impact your credit. How much depends on the type of distressed sale.

If you allow your home to be foreclosed or if you sign a Deed in lieu of Foreclosure. Both of these solutions affect credit the same. Home owners will take a hit from 200 to 250 points on their FICO score. This means if their FICO score before foreclosure was 680, it could dip as low as 430. A home owner who wants to buy another home after foreclosure will end up waiting about 60 months before a lender will offer any kind of interest rate that makes sense for a federally backed loan as well as a conventional. During that time you must work hard to improve your credit score. It is also important to know that any other liens beside the first mortgage (that is the second mortgage or HOA lien as an example) are wiped out by the foreclosure and will show up on your credit report.

If you choose to do a Short Sale on your home: The affect of a short sale on a home owners FICO credit report will be to reduce it from 150 to 200 points. Your credit score could be sent negative by as little as 80 points from the FICO score before financial problems started if there are no late payments involved. This however, would be unusual in my opinion since most of the Sellers in a short sale process have stopped making payments because they have lost their earning ability sufficient to maintain payments or they have been told that they will need to be late on payments by the lender for them to consider a short sale.  When the short sale is complete the sale will typically be reported on the credit report  as a "debit paid off at less than full value" and is much less damaging than a foreclosure.  It can also simply show up as the loan was paid off, it is all up to your lender. In a short sale all liens must be accounted for and be a part of the negotiation process to be released.

Deficiency Judgments: The bad news is a home owner could be subject to a deficiency judgment for the difference between the loan amount and the amount paid. In Arizona, ARS 33-279 section A (shown below) will protect many home owners from a deficiency in the mortgage balance. Where a owner is not protected, the lender has sole discretion whether to pursue a deficiency judgment. In many cases even if a Deficiency Judgment is allowed it not be pursued by the Mortgage Company, it depends on the mortgage company review of your financial situation. If a home owner is trying to decide whether to let a home go through foreclosure versus attempting a short sale, being able to reestablish your credit faster and avoiding a "foreclosure" is the main advantage to doing a short sale.

ARS 33-279 Section A - "Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a lona to pay all or part fo the pruchase price, of a parcel of real property of tw0 and one-half acres or less whcih is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgement in an action to froeclose such mortgage shall not extedn to any other property of the judsbement debtor, nor may general execution be issued against the judgement debtor to enforec such judgement, and if the proceeds of themortgaged real property sold under special execution are insufficient to satisfy the judgement, the judgement may not otherwiese be satiffied out of other property fo the judgement debtor, notwithstanding any agreement to the contrary. "

 

Deed-in-lieu of Foreclosure:

The deed in lieu of foreclosure allows the home owner to be released from most or all of the personal indebtedness. It can help to prevent public notoriety of a foreclosure proceeding. If you have been unable to make your monthly mortgage payments and have also been unsuccessful trying to sell your home at the market value, this form of foreclosure may be what is necessary to get you back on track. This procedure allows you to transfer your property voluntarily to your lender or Mortgage Company. The debt or deficiency maybe forgiven in Arizona depending on your specific situation. It is a negative strike on your credit rating and may be less harmful than a mortgage foreclosure. Typically your Mortgage Company will require that your home has been listed with a Real Estate Agent for at least 90 days and there are no other liens on the property for them to approve you. Some Companies may also require that the property be vacant. This type of foreclosure will typically take 45 to 90 days to complete. 


How Credit Cards Impact Your Credit (FICO) Score


Your credit score or FICO score is made up of five factors. Your use of credit cards will have a direct impact on how your score measures up. The following information was sourced from "Fair Isaac Corp." More information on credit scores can be found by searching credit card information sites.

  • Payment history. This accounts for 35 percent of your FICO score. if you have any late payments, the score will take into account how late your were, how much was owed and how many late payments there were. if your overall report is strong , a few later payments should not impact your score severely.
  • Credit use. 30% of your score is determined by your credit-utilization ratio, which measures your outstanding balance against your available credit. If you have a outstanding debt and cancel a credit card, losing that line of credit will mean your using up more of your credit; which will raise your credit utilization and this lower your score. Experts say its best to use less than 20% of your available credit. Generally speaking the lower the percentage the better.
  • Length of credit history. This determines 15% of your score. So if your closing credit cards, keep the card you have had the longest. One alternative  to closing your accounts, is letting them sit. But you should check on them occasionally to make sure identity thieves are not using them. If you want to make your credit cards are counting toward you credit utilization ratio, you should use them at least once every 6 months. Other wise, that account will show up as being inactive on your report and the credit line won't be factored in.
  • New credit. This makes  up 10% to your score, and signing up for new credit cards doesn't always boost your score because you adding to you line of credit. Instead it can lower your score because you may appear to be a bigger risk.
  • Types of credit in use. This makes up the final 10% of your score, and looks at whether you have a mix of different types credit, such has installment loans or mortgages. It is good to have a history of revolving accounts as much as credit cards so think twice before completely giving up your credit cards.