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Veterans can learn to improve their credit or FICO scores

Friday, March 19th, 2010

Boost your available credit and your chances of securing important loans by improving your credit score.

Credit scores aren’t fixed in stone. Because they’re calculated based on your current credit report, they change every time your credit report changes. While this change may be very slight, it can also be much more dramatic. Here are some things some financial advisers say to do to try to improve your score:

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1. Review your credit report and correct any errors you find. A shocking percentage of credit reports contain errors — one study concluded that as much as a quarter of reports list wrong information that hurt an veteran’s credit score. Getting rid of these negative mistakes can improve a score dramatically.

2. Keep old credit accounts, even if you’re not using them. Creditors look at the debt-to-credit limit ratio and the average age of your accounts.

3. Reduce your balances on credit cards to 75 percent or less of your available credit (25 percent is preferable).

4. Pay your bills on time. Assuming that there are no big errors on your report, punctual payments are the most effective way to improve your score. If you look back to the page on credit score breakdown, you’ll see that payment history is the most weighty of all elements of your score. This has to do with whether you pay debts back on time and in full. This may take time to raise your score dramatically, but you’ll see slow and steady improvement.

5. Don’t let anyone make an inquiry on your credit report unless you absolutely have to. In general, the more inquiries, the lower your score. However, if you are shopping for a loan, make sure multiple inquiries occur within a few weeks, so that they can count as one inquiry on your score.

6. If you are planning on applying for a big loan, such as a mortgage, don’t open new credit card accounts just to increase your available credit in the hopes of raising your score. Opening new accounts will at first have a negative impact. In the long term, however, having more credit available can boost your score.

 Bye-Bye Piggy-backing

It used to help someone’s score to be an authorized user on another’s healthy credit account. However, some organizations now use the FICO ‘08 formula, which doesn’t reward this.

If you go to the bank for a VA loan and are turned down because your score is too low, your would-be lender will get a list of reasons for that low score. You can use that list to try to turn your score around. Since lenders can also use their own scoring methods, nothing is guaranteed, but you certainly can’t hurt your score by taking any of these steps.

Read your credit reports – every word. Errors do happen and when you’re dealing with billions of pieces of data a month, they can happen a lot. Do you count your change when you check out at the supermarket or a restaurant? Your credit report is no small change. Dispute the errors, outdated information, and negative stuff that belongs to someone else’s report.

Also check for signs of identity theft and take immediate action if you discover evidence that someone else is using your good name.

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Posted in VA Credit Score Info | No Comments »

Loan Officer Explains the VA Streamline Refinance with a VA Loan Video

Wednesday, March 17th, 2010

VA Hybrid

Here is the outline of the slide video presentation:

VA Fixed Rate Streamline Program Overview

This presentation will help families to better understand how VA streamline refinances work and the benefits they can expect by taking advantage of this program.

  • VA Interest Rate Reduction Loan (Streamline) Overview
  • Purpose
  • History
    • In 1980 the VA designed this program as a way of improving you current loan
    • Paying off old loan and replace it with a new loan that has a better interest rate and better terms
    • Civilians have been doing this for years
  • You don’t have to . . .
    • No full appraisal
    • No full credit report
    • No income verification
    • No asset verification
    • No employment verification
    • No inspections
  • VA Fixed Rate Loan
    • Very popular VA Loans
    • Number 1 most popular goal of the majority of families I speak with= lower monthly payment as much as possible
    • Lowest Interest Rate
    • Drop our sample veteran from 6.25% to as low as 4.5%
  • Fixed rate for the life of the loan
    • Interest rate will never change. Safe Stable and secure
    • The VA offers 30 year, 25 year, 20 year and 15 year terms
  • Sample Veteran
  • History of the 30 Year Fixed
  • Government Has Been Buying Rates Down
    • This Program Almost Over
  • Additional Cash Benefits
    • Miss two payments
    • Refund of escrow refund
  • At this point I get a lot of questions . . .
    • Is this legitimate?
    • What’s the catch?
    • Is this too good to be true?
    • You can verify at: www.homeloans.va.gov
  • 3 Reasons Your Loan Might Go Up
    • Two missed payments
    • Escrow refund check
    • Closing costs
  • 4 Good Things About Closing Costs
    • No cash out of pocket. The VA allows them to be rolled into new loan
    • 100% tax deductible
    • They are optional: The VA allows you to take a higher interest rate to pay for the closing costs
  • The VA performs a test to ensure this loan will save you more interest than what it costs
  • Rates change every day
  • What Happens Next?
    We need to explore your actual numbers

    • Please give me a call 801-341-7028
    • Or email me at ryan@yourvapro.com
    • Email you a VA Loan Application
    • You complete the paperwork and fax it back along with mortgage statement, homeowners insurance statement, mortgage note, copies of drivers license and social security number verification (takes most families about 20 minutes)
    • When we receive paperwork your VA Processors prepare your file for closing
    • After the underwriters review and give us the clear to close we will have an authorized representative come to your home within the next four weeks to help you to endorse the final closing paperwork and finalize the new loan
  • Please let me know how I can help

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Posted in VA Credit Score Info, VA Loan, VA Refinance, VA Streamline Refinance | No Comments »

Military Veterans need to know how their credit scores affect them

Monday, March 8th, 2010

 

If you aren’t careful about your credit, you could end up paying dearly for a low credit score. Not only can a low score stand in the way of getting a loan for your dream home or dream car, but even if you do get the loan, a less-than-stellar score will make it expensive. As your credit score decreases, you become more of a credit risk in the eyes of lenders. This means they’ll attach a higher interest rate to your loan, and your monthly payments will jump. On the other hand, a high score will lower that interest rate.

Although the score has a big impact, keep in mind that there are other factors that influence the interest rate you get for a loan besides your credit score. These might include things like the type of property you are using the loan to buy, how much of your own money or equity is going into it, the costs the lender pays to make the loan and so on.

In addition to banks and lenders, there are landlords, merchants, employers and insurance companies jumping on the credit score bandwagon. Of all of these, the fact that insurance rates are being determined by credit scores is causing consumers the most alarm. To most, it seems that your credit history and your driving record have little in common. Insurers, on the other hand, have found that credit scores help them predict how likely someone is to file claims. The rule of thumb is the lower the score, the higher the likelihood of filing claims. ­They don’t use the same score that banks and lenders use, however. They use a slightly different formula for their calculations and actually call it an insurance score.

Insurers’ use of credit histories to determine rates is under scrutiny nationwide. Many states are passing laws restricting this practice. In a few states, insurance companies can’t make decisions based solely on credit. In some others, if an insurance company makes a decision that negatively affects your policy based on your credit, it must disclose to you the reasons behind the decision [source: CreditInfoCenter].

Another practice that particularly upsets consumers has to do with credit card companies’ policy of universal default. Although we’ve already learned how a credit score can determine your interest rate, in the case of credit cards, your interest rate can change at the drop of a hat — or rather, at a drop in your score. Even if you always pay your credit card bill on time, if you default on a completely separate loan, your interest on your credit card debt could rise dramatically.

Prospective lenders aren’t the only ones who judge you based on your credit report and credit score. Potential employers check out your credit report too. Why is that you ask? After all, they’re in position to pay you, not the other way around. But businesses reason that the way you handle your finances is a reflection of your behavior in other areas of your life. If you’re late paying bills, you may be late to work. If you default on your car loan, you may not follow through with an important assignment.

Even if your credit woes can be explained, bad credit is a distraction from the employer’s perspective, and it detracts from worker productivity. Recent research shows that employees with credit problems are significantly less productive on the job than those without. So, the easy way out for the employer is to not bother to find out what’s going on, but to hire someone with good credit instead.

Increasingly, credit checks are a standard part of hiring and even promotion process at companies large and small throughout the United States.

All this adds up to say that credit scores are enormously important. So putting a little thought into improving your score could prove a good investment.

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Posted in VA Credit Score Info | 3 Comments »

Can I get a VA loan with Poor or No Credit?

Sunday, February 14th, 2010

Working in the VA mortgage industry for 8 years I get a lot of questions asked regarding everything from credit to inspections.  Needless to say I have been around the block a few times.  Today I thought I would post a topic because I have recently started focusing on VA purchases instead of the VA IRRRL program.  Now credit becomes a factor of approval whereas the IRRRL does not.

POOR CREDIT DOES AFFECT YOUR LOAN

Back when the subprime market was such a big thing is seemed like anyone could buy a home.  The only thing that was affected by bad credit was the interest rate.  If someone with bad credit got a loan their interest rate would be anywhere from 7.5% to 10%.  The idea was lets get a home and then when our credit improved the home was just refinanced to a lower rate.  Obviously that wasn’t the case because property values dropped and no one could qualify – thus the housing crisis.  Now that the mortgage industry is “back to basics” there are fewer home buyer and an ever increasing need to make sure your credit is in good standing.  Because of the housing crisis the VA loan has been effected although the program hasn’t changed.  What changed was the lenders and their requirements to lend money to Veterans.  Here is how the VA analyzes credit – Its the Veterans past repayment practices on obligations.  This is the best indicator of his/her willingness to repay future obligations.  The Emphasis should be on the Veterans overall payment patterns rather than the credit score and isolated occurrences of unsatisfactory repayment.  In the case of adverse data (late payments) satisfactory credit is considered to be reestablished after the Veteran has made satisfactory payments for 12 months after the date of the last late payment.  Here is where the lenders have decided that does not work.  They have put minimum credit score requirements on VA loans.  Usually if the score is not 640 plus there will be no loan regardless of the payment history.

SO WHAT HAPPENS NOW?

Not all is lost.  In fact I have helped many Veterans when they don’t meet the credit guidelines.  Over the years we have gotten much smarter to our approach to getting a Veteran approved.  LowVARates has created an in house credit repair department.  Just because you may think you have bad credit doesn’t mean you should not try to own a home.  Giving up would be fruitless and a poor decision.  Through credit repair we can increase scores and remove late payments creating a valuable opportunity for a Veteran to own a home.

WHAT ABOUT NO CREDIT?

Having no credit does not automatically disqualify you either.  There are several circumstances where a Veteran might be in this situation.  Maybe a recently discharged Veteran has not had the opportunity to develop a credit history.  Maybe they use cash rather than credit.  Some will not use credit after a BK or credit counseling and enough time has pasted that there is no credit.  If this is the case then here is what can be considered as credit history:  Payment record of rent, utilities, car insurance, health insurance, cell phone bill, etc.  If there are in good standing then credit can be issued for buying a home.  Keep in mind that this is for Veterans having no credit.  These additional payment records will not be used to offset bad credit.

Bottom line is if you (Veteran) are looking at owning a home and you think you have bad credit you still should apply.  There are ways to help you and in some cases it might not be right away but through persistence and dedication on both the Banker and Veteran’s part YOU WILL BE ABLE TO OWN A HOME.

If this information has been useful or you have questions about this please feel free to contact me at 1-866-260-1379 ext 222 or email me at Nate@yourvapro.com.  Have a great day and as always happy house hunting!

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Posted in VA Cashout Refinance, VA Credit Score Info, VA Loan, VA Purchase, VA Refinance | 3 Comments »

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