Fixing Your Credit Is As Easy As 1 2 3

Dated: September 9 2020

Views: 576

We all could use a little help on credit, me included.  In my time, helping home buyers reach their goal of home ownership, I have learned a few tricks of the trade to help get that score up 20 or more points in a few months.  It's not instant, but it works.   Now, if we talked on the phone or met in person, you might already know about this website, but if you haven't, or maybe you forget, here it is again.

1.) Go to   Not all credit cards report positive behavior, so you don't get a benefit of paying on time or paying more than the minimum, etc...  These prepaid cards do that for you.  I created a link for you on the BLUE there.  But here's another link.  Click here. 

2.) Buy to pre-paid credit cards.  Yes they are pre-paid... you have to pay for them 1st...  I recommend 300.00 each if you can afford it... if not, then anything is better than nothing.  But my example will be if you did get the 300 pre-paid cards for easiness of the math.  Trust me it will make sense.

3.) Spend 200.00 on each card.  Buy gas, buy food, etc... don't go crazy and buy a new tv with money you don't really have. LOL  Buy what you would have spend with your cash.  The positive recording is that you utilize the credit card but you DON'T MAX IT OUT.  :) Above the 50% threshold is key.

4.) Pay Cards down to 100 each.  Don't pay it all the way down.  The positive recording is that you paid larger than the minimum and you still hold a balance under the 50% threshold.

5.) Rinse and Repeat.  Repeat steps 3 and 4 every month, and after the 2nd month you should see it going up.

We have other systems to get your score up, like Experian's Rental history where you can add your utilities to your credit score, as well as hire a professional to remove judgements, or Lincolnlaw, to remove late payments.  Happy to go over those options... The main key is to DO SOMETHING. :)  I hop you found this useful.

With a higher credit score, you get. 1.) Lower interest rates on car loans 2.) Deposits waived on utilities 3.) A new home! 

                    Target credit scores for home purchase... In case you didn't know

500 - A 500 credit score does qualify you for 10% down FHA program.  The rate isn't that great and you have to put 10% down, but it's an option if you have it.  

    The Hurdle is that if you have a 500 credit score, there's likely some late fees we need to overcome and although you hit the minimum score to qualify, the underwriter might still decline you based on your payment history of items.  But it's worth looking into

580 - A 580 credit score is what most mortgage brokers need to get you desktop underwrite approval.  What does that mean?  It means they plug your information into their computer "tap tap tap... space  tap tap..." and the computer might say DU approval... then they know they have a shot.  They still need a ton of information to qualify you, but at least they are excited to get you rolling... Some establishments require higher to work with because, to be honest, the higher the score the easier the desktop underwriting approval.  But... 580 means we can go look at homes. :) 

They tell you VA programs don't need a credit score, but most of the time, without a 580 credit score, most lenders don't want to work the file.. .because.. DU approval is harder to get... they want to see that DU approval before showing homes.

620 - Conventional Loan approval.  The 580 score is FHA approval... FHA approval is easier (1st time home buyer, federal program) to get because they can go higher on Debt to Income Ratios (DTI) however they have a higher mortgage insurance that doesn't go away.  With a 620 score you can still go FHA or conventional, and the lender should be able to show you what the payments would be for each program and you can make your own decision.  Also, with a 620 credit score there might be a down payment Assistance Program  or DPA you qualify for.  The interest rates are higher but it's a 0% down program, so getting 100% of a quarter of a million dollar home is somewhat appealing, this is where we want to start.

Things to note.  FHA is 3.5% down  Conventional can start as low as 3% down.  Those are the minimums and you can always put down more.

640 - You qualify for the rest of the 0% down FHA and Conventional loan programs out there. :)  It's a ticket for you to home shop....   Also things to note.  Just because you have a 0% down payment doesn't mean you don't have closing costs... lender fees, title fees, escrow fees, home inspection, home appraisal etc... but we will chat about that once you are ready. :) Typical closing costs with DPA programs is around 4% of the purchase price, give or take a little bit... the lender will tell you all of these numbers.

730 - This seems to be the sweet spot for credit scores, lower interest on the FHA and Conventional programs, and easy to have you underwritten... Lenders dream score.   We can get you a home with any of these scores, but you don't need perfect credit to buy a home.

Quit paying down someone elses mortgage for them (AKA RENT) and start building equity for your future.

I hope this was helpful as always, Text "stephen" to 480.725.3877 to start your search today.

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