Archive for the ‘borrower confidence’ Category

Credit Action Transforms Credit Scores with Precision

Thursday, July 8th, 2010

Most home buyers today are not aware of a report that is available to them through their lender that will allow them to see a significant increase in their credit score based on precise action taken on their part.

Credit action reports are available at minimal cost through all three of the main credit repositories; TransUnion, Equifax and Experion.

In the past, it was a loan officer’s “best guess” as to which credit action would produce a credit score increase and then if it did, the amount of the increase was uncertain. The following proposed actions are among the more normal ones:

1.    Pay down the balance on a credit card or revolving account to an amount lower than 25% of the limit.

2.    Pay off a small medical collection for $88 and have the paid off account reported as paid.

3.    Remove a disputed late payment from the past 12 months of history on a current automobile loan.

Any of the above three credit actions will almost definitely produce some sort of positive credit score benefit.  But will the benefit to taking this action be enough?  Let me give you an example.

Many lenders who offer FHA loans are requiring a 640 minimum credit score as the borrower’s middle score (of the three repositories mentioned above).  In fact, FHA now requires a minimum score of 620 and by now, all FHA lenders are requiring this as well.

A hopeful borrower who has had some credit difficulty in the past and finds his middle score at 545 right now would normally be given a few “hints” from a lender and told to call back when he has taken care of them.  He calls around for a second opinion and finds that some of the advice he gets is conflicting.  One lender suggests opening a new credit card (which is never a great idea for various reasons) while others suggest paying off a car loan.  The disoriented borrower stumbles forward and tries again in a few months only to find that his scores have not risen all that much.  This depressing scenario plays over and over leaving the person in essentially the same place for months.

Today we can do much better.  With the credit action report tool, we can tell this borrower exactly which credit actions to take, in which particular order and estimate the actual numeric credit score benefit that will likely be seen with each one.

This gives the borrower confidence that taking these actions will produce a helpful result and thus increases the chance for follow through.

Other applications include getting better rates on conventional loans for both refinancing and purchasing; as well as increasing your standing with insurance companies that use credit scores as part of their matrix for evaluating risk and premium levels.

Put it on your list to talk to your local lender and request a “credit action report”.  Make the improvements now before you need them – it could save you both time and money.

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Es ist eine farblose, stark licht brechende flüssigkeit, die charakteristisch riecht, giftig ist und die augen und schleimhäute reizt