Credit Restoration Center
Utilize our tips and tools restore and manage your credit today.
10 Tips to
- 01) Request your annual credit report. You are entitled to an annual credit report at no charge. Check your credit report now.
- 02) Your FICO Score.
Banks can decide to move forward on your home mortgage based on your credit score. Get your credit score now FREE*
- 03) Examine your credit report frequently. And keep appraised of changes and discrepancies. Get credit report now.
- 04) Report inconsistencies.
Contact the credit bureau the inaccuracy is being reported to.
- 05) Be proactive with creditors. Contact them directly to negotiate a settlement/payback plan.
- 06) Get consumer help with credit issues.
Contact a licensed credit counselor. Check the USA Government approved programs.
- 07) Avoid bad debt. Make your payments on time and use credit cards cautiously.
- 08) Late on mortgage payments? New laws can help avoid foreclosure which will damage your credit. Contact HOPE NOW for assistance.
- 09) Thinking of Bankruptcy? Contact an attorney before making your decision. It will hurt your credit.
- 10) Avoid identity theft.
Protection against identity theft can save your credit. See how theft protection can help here.
How does a fico score determine my credit rating?
Lenders review your FICO (Fair Isaac Company) score as the first step in reviewing your application for a loan. While every lender has guidelines to determine loan approval, the minimum good credit rating scale generally varies between a 650 to 720 FICO score.
The three major reporting bureaus that creditors utilize for FICO scores are Experian, Equifax and Transunion.
Lenders may use one or all three bureaus to decide on loan approval. A decision may also be based on you're your employment record, debt-to-income ratio and how much cash you have in the bank may also factor in to the loan approval process.
If you are unsure of where your credit stands you can contact a licensed credit counselor in your state. They can help you with improving and managing your credit.
Why is a FICO score so critical to secure a home loan?
If you want to get loan approval for any major purchase today, you must have a good credit rating and a good credit rating. A low credit score will make loan approval complicated — if you are able to qualify, you may pay an elevated interest rate, making your monthly payments higher. In general terms, the better your FICO score, the lower interest rate you will pay on your loan.
Do I have good credit?
Your current debt-to-income ratio, credit history and unsecured debt like a credit card compared with other good debt like a mortgage are all factors
in determining your credit score.
Your credit score fluctuates as your debt, income and monthly payments are reported by your creditors. This is why it is so important to monitor your credit frequently
How do I proceed if I have bad credit?
Arming yourself with the facts will find you solutions to your credit woes. Be proactive by contacting your creditors. Find out why they are reporting a negative mark on your credit report and work with them to get the bad mark eliminated or make payment arrangements to correct it. It may take some time, but it will be worth it in the end.
It is always best to contact a licensed credit professional as each case is unique.
How much does a foreclosure influence my credit score?
A foreclosure on your credit report will influence your credit score a great deal. You may see your credit score drop 250-280 points for up
to 7 years.
There is some positive news here – your credit score cannot drop below zero. It will take time to build your credit score to acceptable lending levels. Time and patience along with positive steps to raise your credit rating, will go a long way to build your credit score to acceptable lending levels.
Focus on paying your bills on time and educate yourself ways to set incremental financial goals. Take a look at your past buying behavior and make improvements to curb spending. Consult with a professional about the best way going about repairing your credit.
How much does a short sale influence my credit score?
A short sale will affect your credit; however, not on the same scale as a foreclosure, but may lower your credit score 80-100 points. If you
opt for a deed-in-lieu of foreclosure your credit score may drop 120-175 points.
Since a foreclosure will affect your credit score up to 280 points or higher, a short sale or selling your home by other means is a more palatable option than losing your home to the bank.
How much does a bankruptcy influence my credit score?
There are several different types of bankruptcy filings and they all affect your credit score in a similar way. Individuals usually file
for either a Chapter 7 or Chapter 13 bankruptcy.
A Chapter 13 bankruptcy does not relieve you of your debts forever. It is designed to give you time to reorganize your finances and negotiate a payment schedule with your creditors to discharge the debt. Your credit score may drop 100-250 points for a Chapter 13 bankruptcy. This option is appealing to those who can manage their debt effectively plus your credit score will recover more quickly than with a Chapter 7 bankruptcy.
A Chapter 7 bankruptcy will discharge you from your debts with the exception of income taxes, child support and alimony. However, a bankruptcy filing will affect your credit score in a more damaging way than a Chapter 13 filing. Your credit score may go down as much as 300 points and will damage your credit for up to 10 years.
Before deciding to file for a bankruptcy, consult with a bankruptcy lawyer to determine the best course of action in your individual situation.
Do I need to hire a professional to fix my credit or can I do it myself?
A Do-It-Yourself (DIY) approach to fixing your credit is not only possible, but it can save you a bundle of cash in the long run. All it takes is
some information gathering, time and patience to make it happen.
You can request a free credit score to see where your credit stands. Make a list of any errors you see on your credit and why the error should be disputed.
Every negative credit item you decide to dispute will require documents as proof it should be removed. Some documents will be bank statements, canceled checks, receipts, etc. along with a letter sent via registered mail. The letter can be sent to each credit bureau and they will look into each of your claims separately. Once the investigation is complete, any corrections needed to be made will be done.
Review the credit section of the FTC Web site. It includes a useful section on fixing your own credit. You can obtain sample letters to send to the credit bureaus, laws, procedures and who to contact for additional information on credit ratings and repair.
What is a deficiency judgment in relation to foreclosure?
There has been a rise in what's called a "strategic" foreclosure due to declining home values. A strategic foreclosure usually happens when the
homeowner owes more on the home than what the home is now worth, they can typically afford the payments but decide they will never recoup there losses and decide to
let the house go back to the bank.
Many banks are now going after these homeowners through what is called a deficiency judgment. A deficiency judgment is when a lien is obtained against a debtor when the mortgage has not been paid in full after a foreclosure or a short sale.
More than 30 states have laws on the books that allow lenders to file for a deficiency judgment, including Texas, New York and Florida. California does not permit deficiency judgments liens, which makes it a "non-recourse" state. However, if you refinanced your home or took a second mortgage you may be subject to claims for part or the entire deficient amount.
A lender may or may not decide to move forward on a deficiency judgment after looking at your entire financial picture based on information submitted and checking your credit report. If you are late with your bills, the lender may decide not to pursue a deficiency judgment. However, if you pay your bills on time and only your mortgage is in default the bank may decide to go after the deficiency judgment.
If your bank is trying to come after you for a deficiency judgment, you should seek the advice of an attorney for possible solutions including possible bankruptcy.
Why will the new credit card laws affect my credit?
Designed to assist consumers with out of control interest rates and spiraling credit card fees, the Credit Card Act of 2009 limits what credit card
companies can charge the consumer.
The law includes limits on fees and interest rates that credit card issuers can charge and how they inform the consumer when fees will be raised. It also limits "universal default," which had previously allowed credit card companies to raise your interest based on your payment records with other credit card issuers. You now have the right to "opt out" if you do not agree to any new terms to your credit card agreement. You will be able to close your account without penalty and pay off the balance in five years at the current interest rate.
While the law is intended to protect consumers, you still need to keep a watchful eye on your credit. The law does not fully protect you from all aspects of credit. Being proactive can save you time and money. Read your statements thoroughly as soon as you get them, make your payments on time and contact your credit card issuer immediately if you find discrepancies on your bill.