How long does it take to improve yourcredit score? We're going to talk about it right now! How long does it take toimprove your credit score? If you're thinking of buying a home in the nextthree, four, even seven years it's not too early!I'm Susan Thetford with Parks Properties and I'm here with my friend Brandon ofLegacy Home Loans and we're going to talk about the things that he sees dailyin his work to help people improve their credit score and get them in shape tobuy a home.
So Brandon, thank you! So here's the firstthing I want to ask.
Even if somebody's not planning on buying a home this year, whydo they even need to be concerned with their credit score? Right, so for mostmortgage programs, a credit score is required and most of them have a minimumcredit score that you need to meet in order to qualify.
FHA does have an optionthat you you can have a no score and you can do non-traditional lines of credit,but we'll get into that one later; but, it's a little bit more difficult toqualify and not as ideal as having a score.
So, for most mortgage programs likeI said especially -conventional loans which is probably your target loanprogram that you hope to hope to achieve- you need at least a minimum credit score.
So, it's not gonna —we're Nashvillians and it's not gonna make Dave Ramseyhappy— but truly, if you want to get the optimal score and the optimal loan atthe best rate, a credit value, a credit record, is necessary.
Loan underwriters require thecredit history and credit score and the higher your score is it helps onboth.
If you put less than 20% down on conventional loans, it drastically helps decrease your mortgage insurance thehigher your score is.
And, there are differences in the credit ratingcompanies- like what you would go for credit rating to buy furniture isdifferent than the home ratings, right? Right, auto loans or credit karma theFICO scores that we get as mortgage lenders across the board uses the samescoring model but Credit Karma and other things of that nature usedifferent scoring models so a lot of times people come to me and they've seen their credit score somewhere.
Say it's in the high 700s andthen when we pull it it's actually possibly lower than that and notaccurate from what they were expecting.
So it's better to have us pull itto verify that the FICO scores that we see as lenders are you know what you areaware that you have and then what we're gonna use for a loan- all the more reasonto go ahead and start talking to someone like you first to really know what thewhole picture is like! So, let's assume somebody knows, or they think they reallymight have some issues they really might have some problems on their credit-should they go to a credit consolidation company? Should they go to her somebodywho is a credit professional or come to somebody like you first who was in thisbusiness? I would suggest coming to someone like me first because we dealwith this everyday.
A secure place every day- there's no cost, there's really nodownside to trying to get pre-approved and having your credit checked by a lenderbecause then we're able to see what scores would be used by a lender obviously and then all of the debts and monthly payments and your credit scoresthat come up when we pull the when we pull the credit report and then possiblythings that you're not even aware of that are there -such as a medical collectionor something like that -we can see and then, and because we deal with it somuch we can give you some advice and let youmake sure you're aware of what's there.
And help you through it.
So, what are someof the common problems what are some of the common issues that you see that mostpeople may not be aware of? Right, the most common thing that people aren'taware of are medical collections.
So, sometimes it will get reported and itmay not even come up on Credit Karma and I can't tell you how many times I see amedical collection for $20 and they don't know that it's even there and it'sbringing their score down 50, 60, 70 points! Wow ! And a lot of times youcan, you know, pay that medical claim have them remove it from your credit reportand it'll go away and your score will come right back up; so that's the mostcommon thing I see that people aren't aware of– that's a big difference! So, it'sreally not even the amount of debt that's not paid yet, it's it's just thefact that there isn't just because there's a collection there, gee.
That's abig factor and then I often see 30-day late payments that are there that couldhave been a miscommunication from — address change.
Sometimes you can getthose corrected as well.
Got it ,and you said something else if.
You pay off something, what is to make sure.
? Right, so if you have a collection,just paying it doesn't necessarily help your score right away.
If you're goingto pay it, I would take a step further and you might have to go to a supervisorof the collection agency but if you're going to pay that and make them agreethat they're gonna completely remove from the credit report also.
and give youwhat's called a "letter of deletion" that will that will prove that they're gonnatake it off because once it's paid you can still stay there with a zero balanceand still show up.
but , if you get them to completely remove, it it's almost like itnever happened and then your score goes back to what it would have been withoutthe collection.
So they may well take a payment in full or even a payment lesserpayment but still get in writing from them that once you make that paymentthey will also remove it.
It's not just no or low balance or no balance.
youwant them to remove it completely when they go on so it's all kind of off therecord.
So our premise in this quote in this video is how long does it take toimprove the credit score.
And really the answer is not what anybody everwants to hear- it it's "case by case" and sometimes it can be a longer timeframethan you hoped for, or somehow you'd be very quick.
I've seen the medicalcollections removed, and then your rating comes up within a few days; but it is ona case by case basis.
That's why it's good to talk and plan ahead.
You know saya year from buying so you can see what's on the reporting.
You have time to dealwith it, time and knowing what you're dealing with -and there's no" black andwhite" kind of answer to it.
So what are some, just give us three quick tips thatyou might have for someone who was either wanting to make sure they havegood credit or keeping it good? Right, so one thing that most people aren't awareof is keeping low balances on credit cards.
So if you have a credit card thathas say a $5,000 max and you're at $4500 that's going to bring your score down.
Some compared to if you have a pocket some action you have a $1000 balance so just the simple fact of, let's say your credit score's at 730 which isreally good credit if you have the ability to pay some of those cards downyou can get that 730 up you know 20, 30, 40 points and when you have mortgageinsurance, like I said, that can just save you a lot of money on a monthly payment.
Just that little bit of what was a good score can become a great score bylowering those balances right the other thing is there's a lot of creditcompanies and tailors one for instance I see certain credit reports that maybesomebody had a 30-day late payment and they're one of the credit card companiesthat will a lot of times if you have a good good clean history don't give you aone time forgiveness on that 30-day late so it's always good to check with thecreditor and you might have to call a few different times I've talked to a fewhundred people but it's worth it to see if you can get that 30-day late forgivenand if they remove that I mean if it's a recent 30 day late that can be 50 pointson your credit that's really valuable valuable phone calls absolutely valuablephone calls so the quick tips keep your credit card balances is about 25 percentof the max use them don't have them at zero balance and that one surprised meactually that one really surprised me but they show a history of being ableto maintain credit and low balances and make your payments on time and all ofthat loops you're trying to show the ability that you can have money but youdon't spend it right and you spend it wisely I Mexican that makes good sensewell if someone has more questions for you and and this is something thatBrandon does on a daily basis and helping people get ready to buy and asyou say two years four years from now or ready to buy in the next six months instarting always with a professional like Brandon getting the loan but even waybefore that getting yourself in healthy financial spent but to be able to getthat loan is super important I'm gonna put all of your information down in thein the cards but tell people here how I can reach you yes Brandon Carter withlegacy home loans and my email address is Brandon at my lhl comm and my cellphone number is six one five three nine zero six nine four two and don't beintimidated credit is what it is it doesn't mean anything positive ornegative we just got to work on until it gets where it needs to be and we do itevery day if you're an adult you got it whether you like it or not it just goeswith the territory right Thank You Brandon this has been terrific and we'regonna do another one the next one we need to talk about is that option thatif you have no credit history you don't want a credit history there are optionsto buying a home and we're gonna talk about that through the FHA program butlet us know if you'd like to know more about that talk to you soon you warm upyes you can warn their chef here Brandon thing.