Paul Oster, CEO of Better Qualified, appears on the Wall Street Journal’s Daily Wrap Show hosted by Michael Castner. The show is heard on over 100-radio stations coast to coast. In this informative interview Paul talks about improving, protecting and monitoring your credit score on a regular basis as well as the secrecy behind how your credit scores are determined.
Category: BQ News
Kansas case puts face on ‘total identity theft’
Roxana Hegeman
October 23, 20
WICHITA, Kan. (AP) — When Candida L. Gutierrez’s identity was stolen, the thief didn’t limit herself to opening fraudulent credit and bank accounts. She assumed Gutierrez’s persona completely, using it to get a job, a driver’s license, a mortgage and even medical care for the birth of two children.
All the while, the crook claimed the real Gutierrez was the one who had stolen her identity. The women’s unusual tug-of-war puts a face on “total identity theft,” a brazen form of the crime in which con artists go beyond financial fraud to assume many other aspects of another person’s life.
The scheme has been linked to illegal immigrants who use stolen Social Security numbers to get paid at their jobs, and authorities fear the problem could soon grow to ensnare more unsuspecting Americans.
“When she claimed my identity and I claimed it back, she was informed that I was claiming it too,” said Gutierrez, a 31-year-old Houston elementary school teacher. “She knew I was aware and that I was trying to fight, and yet she would keep fighting. It is not like she realized and she stopped. No, she kept going, and she kept going harder.”
A 32-year-old illegal immigrant named Benita Cardona-Gonzalez is accused of using Gutierrez’s identity during a 10-year period when she worked at a Topeka company that packages refrigerated foods.
For years, large numbers of illegal immigrants have filled out payroll forms using their real names but stolen Social Security numbers. However, as electronic employment verification systems such as E-Verify become more common, the use of fake numbers is increasingly difficult. Now prosecutors worry that more people will try to fool the systems by assuming full identities rather than stealing the numbers alone.
For victims, total identity theft can also have serious health consequences if electronic medical records linked to Social Security numbers get mixed up, putting at risk the accuracy of important patient information such as blood types or life-threatening allergies.
Federal Trade Commission statistics show that Americans reported more than 279,000 instances of identity theft in 2011, up from 251,100 a year earlier. While it is unclear how many of those cases involve total identity theft, one possible indicator is the number of identity theft complaints that involve more than one type of identity theft — 13 percent last year, compared with 12 percent a year earlier.
Nationwide, employment-related fraud accounted for 8 percent of identity theft complaints last year. But in states with large immigrant populations, employment-related identity fraud was much higher: 25 percent in Arizona, 15 percent in Texas, 16 percent in New Mexico, 12 percent in California.
Prosecutors say that the longer a person uses someone else’s identity, the more confident the thief becomes using that identity for purposes other than just working.
Once they have become established in a community, identity thieves don’t want to live in the shadows and they seek a normal life like everybody else. That’s when they take the next step and get a driver’s license, a home loan and health insurance.
“And so that is a natural progression, and that is what we are seeing,” said Assistant U.S. Attorney Brent Anderson, who is prosecuting the case against Gutierrez’s alleged impostor.
Gutierrez first learned her identity had been hijacked when she was turned down for a mortgage more than a decade ago. Now each year she trudges to the Social Security Administration with her birth certificate, driver’s license, passport and even school yearbooks to prove her identity and clear her employment record.
She spends hours on the phone with creditors and credit bureaus, fills out affidavits and has yet to clean up her credit history. Her tax records are a mess. She even once phoned the impostor’s Kansas employer in a futile effort to find some relief.
Both women claimed they were identity theft victims and sought to get new Social Security numbers. The Social Security Administration turned down the request from Gutierrez, instead issuing a new number to the woman impersonating her. And in another ironic twist, Gutierrez was forced to file her federal income tax forms using a special identification number usually reserved for illegal immigrants.
“It is such a horrible nightmare,” Gutierrez said. “You get really angry, and then you start realizing anger is not going to help. … But when you have so much on your plate and you keep such a busy life, it is really such a super big inconvenience. You have to find the time for someone who is abusing you.”
When Gutierrez recently got married, her husband began researching identity theft on the Internet and stumbled across identity theft cases filed against other illegal immigrants working at Reser’s Fine Foods, the same manufacturer where Cardona-Gonzalez worked. He contacted federal authorities in Kansas and asked them to investigate the employee working there who had stolen his wife’s identity.
The alleged impostor was arrested in August, and her fingerprints confirmed that immigration agents had encountered Cardona-Gonzalez in 1996 in Harlingen, Texas, and sent her back to Mexico.
Cardona-Gonzalez did not respond to a letter sent to her at the Butler County jail, where she is awaiting trial on charges of aggravated identity theft, misuse of a Social Security number and production of a false document.
Her attorney, Matthew Works, did not respond to phone calls and emails seeking comment. Court filings indicate the two sides are negotiating a plea agreement.
Citing privacy issues, the Social Security Administration declined to discuss the Gutierrez case. Reser’s Fine Foods did not return a message left at its Topeka plant.
Anderson expects more cases of total identity theft “because we all know what is going on out there — which is thousands and thousands of people who are working illegally in the United States under false identities, mostly of U.S. citizens, and very little is being done about it. But we are doing something about it, one case at a time.”
New consumer help with credit reports
Kathleen Pender
October 22, 2012
Starting this week, consumers who have trouble getting mistakes in their credit reports corrected or have other problems with credit bureaus can file a complaint with the Consumer Financial Protection Bureau.
The CFPB will help consumers resolve issues with credit reporting agencies, also known as credit bureaus or consumer reporting agencies. These include the big three – Equifax, Experian and TransUnion – and some smaller companies.
The CFPB says it will help consumers resolve issues such as incorrect information on a credit report, improper use of a credit report, inability to get a credit report or credit score, and problems with credit monitoring or identity protection services.
To preserve consumers’ rights under the Fair Credit Reporting Act, they should file a complaint with the credit bureau first and get a response before filing one with the CFPB.
The bureau gained authority on Sept. 30 to supervise consumer reporting agencies with more than $7 million a year in revenues. This includes about 30 companies that account for 94 percent of the industry.
This is the first time a federal agency has been able to provide individual assistance to consumers with credit bureau problems. Previously, the Federal Trade Commission had jurisdiction over the Fair Credit Reporting Act and could file lawsuits or other enforcement actions against credit bureaus that violated the law.
But it did not supervise credit bureaus – or have the ability to examine their procedures and write regulations. The CFPB does have that authority and shares enforcement of the act with the FTC.
“We think it’s the level of regulation the credit bureaus always should have had, because they are so vital to the economic lives of Americans,” says Chi Chi Wu, an attorney with the National Consumer Law Center.
To submit a complaint, consumers can:
— File online at consumerfinance.gov/Complaint
— Call (855) 411-2372 toll free
— Fax a letter to (855) 237-2392
— Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, IA 52244
When a consumer disputes information in a credit report – such as a late payment or bankruptcy – the lender that provided the information and the credit bureau are required to conduct a “reasonable investigation” to determine its accuracy and, if it’s wrong, correct it.
The credit bureau typically “boils the complaint down to a code, beams the code to the creditor and they do a mindless data comparison. The courts have said you cannot do just a mindless comparison of data; you have to do more. But they continue to do a mindless comparison,” says Evan Hendricks, author of “Credit Scores and Credit Reports.”
“Clearly, the presence of another cop on the beat can only help. It’s possible and even likely that if someone complains to the CFPB (the consumer) might get action,” Hendricks adds.
The bureau previously began taking complaints about mortgages, bank accounts, consumer loans and private student loans. From July 21, 2011, through Sept. 30 of this year, it received roughly 79,200 gripes about these products.
When it gets a complaint, the bureau makes sure the consumer is a customer of the company. It then forwards the complaint to the company, which has 15 days to make a “substantive response” to the bureau. Companies generally are expected to close complaints within 60 days.
The bureau says it will “prioritize for individual investigation” complaints that are not closed in a timely manner and resolutions that the consumer disputes.
The bureau says 82 percent of complaints received as of Sept. 30 have been sent to companies for review and response, and of those, companies have responded to about 94 percent.
Eminent domain: Is the idea of using eminent domain to seize underwater mortgages losing steam?
A consortium in San Bernardino County that was the first to publicly consider the idea was supposed to meet Thursday, possibly to review and maybe even issue requests for proposals. But it canceled the meeting and is not scheduled to meet again until Jan. 24.
The Homeownership Protection Program Joint Powers Authority – formed by the San Bernardino County and the cities of Fontana and Ontario – canceled its meeting because it could not get a quorum. “It became apparent last week that enough members had scheduling problems,” says David Wert, a spokesman for the county.
The authority was formed to publicly consider a program sponsored by San Francisco’s Mortgage Resolution Partners. The original plan called for having local governments use eminent domain to seize underwater but performing mortgages out of private-label securities. The city would pay fair market value, then refinance the mortgages at the home’s current market value. Mortgage Resolution would collect a fee and find private investors to fund the purchase of the mortgages.
Since then, other groups have approached the authority with ways to help underwater homeowners, some of which involved eminent domain.
There was no agenda for this week’s meeting, but the only thing the authority could have done was review a draft request for proposal and at most, issue the request to all interested groups, Wert says.
The authority’s chairman – San Bernardino County chief executive Greg Devereaux – could schedule a meeting before the group’s next quarterly meeting in January. He did not return my call, and Wert could not say if that’s likely.
“It’s a bit unusual not to get a quorum for a scheduled meeting, but it highlights the difficulty of moving forward with any eminent domain program,” says Tom Deutsch, executive director of the American Securitization Forum, one of many financial groups opposing the plan.
Other cities – including Oakland and Berkeley – have expressed interest in the idea, but none is as far along as San Bernardino.
Graham Williams, chief executive of Mortgage Resolution Partners, says he is “not discouraged” by the meeting’s cancellation. “These things happen,” he says. “We are continuing conversations.”
Short Sales – 10 Common Myths Busted
by Brandon Brittingham on September 26, 2012
It’s likely you’ve heard the term “short sale” thrown around quite a bit. What exactly is a short sale?
A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness. If you want to get out of your mortgage, see here now the details.
To be eligible for a short sale you first have to qualify!
To qualify for a short sale:
- Your house must be worth less than you owe on it.
- You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc… also qualify. There are some exceptions to hardship now, but for the most part the bank or investor will need to verify some type of hardship.
Now that you have a basic understanding of what a short sale is, there are some huge misconceptions when it comes to a short sale vs. a foreclosure. We take the most common myths surrounding both short sales and foreclosures and give a brief explanation. LET’S BUST SOME MYTHS!!
1.) If you let your home go to foreclosure you are done with the situation and you can walk away with a clean slate. The reality is that this couldn’t be any farther from the truth in most situations. You could end up with an IRS tax liability and still owing the bank money. Let me explain. Please keep in mind that if your property does go into foreclosure you may be liable for the difference of what is owed on the property versus what is sells for at auction, in the form of a deficiency balance! Please note this is state specific and in most states you will be liable for the shortfall, but in some states the bank may not always be able to pursue the debt. Check your state law as it varies widely from state to state.
Here is an example of how a deficiency balance works
If you owe $200,000 on the property and it sells at auction for $150,000, you could be liable for the $50,000 difference if your state law allows it.
Not only could you be liable for the difference to the bank, but in some situations you could also be liable to the IRS! Although there are exemptions (mostly for principle residences) under the Mortgage Debt Forgiveness Act, there are times when you could be taxed on both a short sale and a foreclosure, even in a principle residence situation. Since the tax code on this is a little complicated and I am not a CPA, I advise always talking to a CPA when in this situation as you are weighing your options. Hard to believe? Well, believe it or not, the IRS counts the difference between the sale and the charged off debt as a “gain” on your taxes. That’s right-you lost money and it’s counted as a gain! (I didn’t make that rule, that’s a wonderful brainchild of the IRS). Banks and the IRS can go as far as attaching your wages. Not to mention if you let your home go to foreclosure you will have that on your credit, as well.
Guess What? A short sale can alleviate your liability to the bank, in most situations. There are also exceptions to this, but in most cases banks are releasing homeowners from the deficiency balance on a short sale.
2.) There are no options to avoid foreclosure. Now more than ever, there are options to avoid foreclosure. Besides a short sale, loan modifications along with deed in lieu are also examples of the many options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.
3.) Banks do not want to participate in a short sale, or, it is too hard to qualify for a short sale. Banks would rather perform a short sale than a foreclosure any day. A foreclosure takes a long time and creates a huge expense for the banks; a short sale saves both time and money. In working with some of the biggest lenders and servicers in the country they have told me that on average they net 17-25% more on a short sale than on a foreclosure. A testament to this is the financial incentives now being offered by banks, and how much the entire process has recently changed to try and streamline the process for all parties. Banks more than ever welcome short sales. Qualifying for a short sale is easier than you think, you need to have a true financial hardship, or a change in your finances and your house has to be worth less than what you owe on it. Not only do consumers, but banks also now have government incentives to participate in short sales.
4.) Short sales are not that common. At this present time, short sales range from 10-50 % of sales in various markets and it is predicted that in 2012 we will have more short sales than any other year, to date. Due to economic changes in the last few years, this is something that is affecting millions of Americans. Short sales are in every market, and are not just limited to any particular income class. This has affected everyone from all facets of life. A short sale should be looked at as a helpful tool, not a negative stigma. That is why the government is offering programs that actually pay consumers to participate in short sales. It is not just affecting one community; it is affecting communities and consumers across the nation.
5.) The short sale process is too difficult and they often get denied. Though the short sale process is time consuming; it is not as difficult as the media would have you believe. The problem is that most short sales are denied because of a misunderstanding of the process. It is true that if the short sale process is not followed correctly there is a good chance of getting denied. An experienced agent knows how to avoid this. Short sales require a lot of experience, and a special skill set. If you are looking to go the option of a short sale make sure your agent is skilled and experienced in this area.
6.) Short sales will cost me money out of pocket. A short sale should not cost you any out of pocket money. In fact, you could get between $3000-up to $30,000 to participate in a short sale. In many ways, a short sale may put you in a better financial position than prior to the short sale. Almost every short sale program now has some type of financial incentive for the home owner, as long as it is a principle residence, and we are even seeing relocation money being paid on some investment/second homes. As a seller of a property you should never have to pay for any short sale cost upfront to any professional service. Realtors charge a commission that is paid for by the bank. In most communities there are also non-profits and HUD counselors who can help you with foreclosure prevention options for free. The only potential cost you could incur is if the bank would not release you from a deficiency balance in the short sale, which is happening less and less now.
7.) If I am behind on my payments, I can perform a short sale any time. The farther you get behind on your payments, the harder it is to get a short sale approved. The closer a property gets to a foreclosure the harder it is to convince the bank to perform a short sale. As they get closer to a foreclosure sale more money is spent, thus deterring them from doing a short sale. If you think you need to perform a short sale, time is of the essence; the sooner you start the process, the better. Waiting too long can trigger the ramifications of a foreclosure, losing the ability to do a short sale as a viable option.
8.) I have already been sent a foreclosure notice so I can’t perform a short sale. For the most part just because you received a foreclosure notice or notice of default it does not mean that you do not have time to perform a short sale. The timeline and specifics do vary from state to state, but having done short sales all over the country, I have seen banks postpone a foreclosure to work a short sale option as close as 30 days prior to the scheduled foreclosure auction, but the longer you wait the less chance you have. If you have received a legal foreclosure notice, please reach out to a professional right away. The longer you wait, and the closer you get to foreclosure, the fewer options you have. If you have received a notice to foreclose this means the bank is filing paperwork and starting the process to take legal action to repossess the house. You still have time at this point to prevent foreclosure, but do not hesitate! The closer you get to the foreclosure date the harder it becomes to negotiate with the bank for whichever option you choose.
9.) I was denied for a loan modification, so I know I will get denied for a short sale. Short sales and loan modifications are handled by two separate departments at the bank. These processes are totally different in approval and denial. If you got denied for a modification you can still apply for a short sale; in some cases you can get a short sale approved faster than a loan modification, as some loan modifications are denied because they cannot reduce the loan low enough based on the consumers income.
10.) If I go through a short sale I cannot buy another house for a long time. The time to buy another house depends on your entire credit picture and can vary from 2-3 years. There are even a few FHA programs that allow for a purchase sooner than that. It is possible to purchase a home in less than 2 years after going through a short sale, but the guidelines are pretty tight, each case is different but that is a reality.
These are just a few of the common myths surrounding short sales and foreclosure. With the options available today, no homeowner should ever have to go through foreclosure, and hopefully this information can help a few more homeowners think twice before walking away from their home not realizing the possible long term ramifications a foreclosure can have.
10 reasons you can’t get credit
By Gerri Detweiler, Credit.com
8/10/2012
When an application is turned down, you should know why. Here are some of the common reasons, and what you should do next.
If you’ve never been rejected for credit, count yourself fortunate. Somewhere between 25% and 35% of credit card applications are typically approved, “depending upon the pricing value proposition and other factors,” according to Robert Hammer, the president of R.K. Hammer and Associates, a consultant to the card industry.
With some issuers, the approval rate may be a mere 10% or so.
If you’re not turned down for credit, you may be told instead that you didn’t qualify for the best rate. Either way, if a credit score (or credit-based insurance score) was used in the decision, you must be told the main factors that contributed to your score.
Deciphering those reasons can be maddening, though. “What do you mean, I have no recent revolving balances?” Or, “So it says my account balances are too high. What does ‘too high’ mean anyway?”
Here’s a guide to some of the main reasons you may be turned down — and what you can do about them.
Keep in mind that these are just some of the factors that may be used to evaluate your credit. Not all of them will apply in all situations, and there may be variations on these as well.
‘Proportion of balances to credit limits is too high on bank revolving or other revolving accounts’
What it means: The score likely looks at your total available credit limits and compares them with your outstanding balances, individually and in the aggregate. The greater the percentage of your available credit that you are using, the greater the impact on your scores. There’s no magic number here, though. In other words, getting your balances below 30% or 50% of your available credit doesn’t automatically eliminate this factor.
What you can do about it: Focus on paying down balances that are close to the credit limits as quickly as possible. What about transferring a balance from a maxed-out card to one with a smaller balance? While that might help, it’s not likely, since you still have just as much debt as before (another factor). If you can’t make headway on paying down your credit cards, you may want to talk with a credit counseling agency.
‘Amount owed on accounts is too high’
What it means: This factor may look at your debt in comparison with that of other consumers, and if your debt is higher than optimal, it could show up as a reason why you weren’t approved.
What you can do about it: This one is particularly frustrating because you probably have no idea how much debt is too much, nor do you know which balances to try to pay down first. Typically, though, you’ll get the most bang for your buck, credit-wise, by focusing first on paying down your credit cards with balances that are closest to the limits.
‘Too many recent inquiries in the past 12 months’
What it means: This reason appears when your credit report indicates a high number of credit applications (inquiries) within the past year. But not all are counted the same. Checking your own credit reports doesn’t count; nor do promotional inquiries, inquiries from employer and insurance companies, and account reviews by your current creditors. The impact of inquiries on your credit will vary, depending on your overall credit profile, but the typical inquiry can be expected to affect your score by about five points.
What you can do about it: This reason is more likely to appear when you have a limited credit history or strong credit, simply because there are fewer other significant negative factors affecting your scores. But it doesn’t hurt to lay low for a while. Avoid opening new retail cards. While inquiries resulting from shopping for a mortgage, student loan or auto loan aren’t as likely to hurt your score as the same number of inquiries for credit cards, limit your applications to a short period of time, such as 14 days.
‘Level of delinquency on accounts’
What it means: Delinquency refers to payments that were late. The general rule of thumb is that the further you fall behind, the greater the impact on your credit score.
What you can do about it: If the information is inaccurate, you can dispute it. If it’s correct, you’re going to have to live with it for a while; usually up to seven years. Focus on making your current payments on time. If cash is tight, remember that all you have to do is make the minimum payment on time to avoid a delinquency on your report.
‘Time since delinquency is too recent or unknown’
What it means: Recent late payments will have a greater impact on your score than older late payments. Typically, delinquencies within a year or two will hurt your scores the most. If an account was delinquent a while ago but the credit report doesn’t indicate the date, this factor can pop up as well.
What you can do about it: The good news is that as time passes, these delinquencies will carry less weight, especially when you are paying current bills on time. But the date is important here. If an inaccurate date (or no date) is reported for a charge-off or collection account, for example, make sure you dispute that with the credit-reporting agency.
Buying beats renting in most U.S. cities
August 2, 2012
NEW YORK (CNNMoney) — For people who are willing to stay put for a few years, buying a home has become a much better deal than renting in almost every major housing market in the nation.
In more than 75% of the 200 metro areas analyzed by real estate listing web site Zillow, homeowners would reach a “breakeven point” — where owning the home makes better financial sense than renting it — in three years or less.
“Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5% over the past year,” said Stan Humphries, chief economist for Zillow.
The survey was Zillow’s first buy-versus-rent analysis, incorporating all homeownership costs, including down payments, closing costs, mortgage payments, property taxes, utilities and maintenance costs, and compared them to rental costs. It also took into account projected home price appreciation and rent increases, as well as tax deductions and inflation.
Zillow’s findings support other reports that show that rising rents, record-low mortgage rates and falling home prices have made homeownership a more attractive option. For more real estate information and listings go right here.
In some of the metro areas Zillow looked at, home buyers would break even in less than two years.
In Miami, for example, a homebuyer would only have to stay in their home for about 1.6 years for the purchase to pay off, Zillow said.
Homes in the metro area are selling for about 45% less than they were five years ago. Meanwhile, over the past three years, rents have climbed 20%, according to RentJungle.
Miami’s metro area, along with Tampa, Fla., Memphis, Tenn., and several smaller cities, have the shortest break-even times of the markets Zillow analyzed.
Renters still have the upper hand in some cities. It would take home buyers in San Jose, Calif., 8.3 years to break even on their homes — the longest period of time of any of the metro areas Zillow surveyed. Other big cities where buying was not such a good a deal were Honolulu, at a six-year break-even point, and San Francisco at 5.9 years
Buy vs. rent in 30 major cities
| City | State | Breakeven time in years |
|---|---|---|
| New York | N.Y. | 5.1 |
| Los Angeles | Calif. | 4.3 |
| Chicago | Ill. | 2.8 |
| Dallas | Texas | 2.1 |
| Philadelphia | Pa. | 3 |
| Washington | D.C. | 3.5 |
| Miami | Fla. | 1.6 |
| Atlanta | Ga. | 2.5 |
| Boston | Mass. | 4.3 |
| San Francisco | Calif. | 5.9 |
| Detroit | Mich. | 1.7 |
| Riverside | Calif. | 2 |
| Phoenix | Ariz | 1.7 |
| Seattle | Wash. | 4 |
| Minneapolis | Minn. | 2.7 |
| San Diego | Calif. | 3.6 |
| Tampa | Fla. | 1.6 |
| St. Louis | Mo. | 2.5 |
| Baltimore | Md. | 2.8 |
| Denver | Colo. | 2.5 |
| Pittsburgh | Pa. | 2.1 |
| Portland | Ore. | 3.5 |
| Sacramento | Calif. | 3.1 |
| Orlando | Fla. | 1.7 |
| Cincinnati | Ohio | 2.1 |
| Cleveland | Ohio | 2.4 |
| Las Vegas | Nev. | 1.7 |
| San Jose | Calif. | 8.3 |
| Columbus | Ohio | 2.4 |
| Charlotte | N.C. | 2.7 |
Source: Zillow
Using rent payments to rebuild your credit
Thursday, June 7, 2012
By Tara-Nicholle Nelson
Q: How can I set up a lease-to-own on a three-unit property and have it count on my credit report? –Bruce T.
A: I’m delighted that you asked this question, for several reasons. There are many, many folks out there who are trying to recover their finances and their credit in the wake of a foreclosure, job loss or other recession-era money trauma. And, though the market has indeed picked up for sellers, there are still many who are struggling to get their homes sold at or near the price they need. A lease-to-own arrangement, more formally known as a lease-option, can be a smart, win-win strategy for both these types of people.
If you have lost a home to foreclosure or short sale, or just have had a rough few years, financially speaking, you may be blocked from obtaining a bank- or credit union-issued mortgage loan for a set period of time, but a seller might still agree to a lease-option. The challenge is that most individual landlords don’t report payments to the credit bureaus. As a result, while you’re making lease payments, your derogatory marks on your credit might fade away, but they aren’t contributing to the sort of positive credit history that you desire.
Some things to consider as you take on this challenge:
1. Understand what specific credit challenge you are trying to solve before you try to formulate the solution. Are you trying to improve your actual FICO score to a certain level? Or are you simply trying to reposition yourself to qualify for a mortgage in a few years? The plain truth is that even if your landlord/seller does report your payments, it still may not increase your numeric credit score, because it is not a conventional credit line that falls within the bureaus’ scoring algorithms.
So, if you’re looking to boost your credit score, rent reporting might not do it. If you are looking to qualify for a mortgage, though, there might be another way to leverage your rent payments toward that end.
2. Know that mortgage lenders might look favorably on your positive rent history even if it’s not reported. Lenders require more than a minimum credit score as a sign of creditworthiness. They also require a minimum number of trade lines, which are simply credit accounts.
For example, a lender might require borrowers to have a FICO minimum of 640 and a minimum of three open trade lines in order to qualify for a given mortgage program. Some lenders and loan programs will allow you to present your lease-option agreement, your canceled rent checks and/or your checking account statements showing your on-time rent payments as a nontraditional trade line account.
If getting another mortgage is your primary objective for having your rent payments reported, talk with your mortgage broker now about the documentation you’ll need to collect for the duration of your lease.
3. If you still want your payments reported, get up to speed on the alternatives. Traditionally, the only rental history items that appeared on credit reports of the big three bureaus — Experian, TransUnion and Equifax — were extremely derogatory items like evictions and court judgments for delinquent rent. However, there are specialized rental reporting bureaus to which property management companies and large landlords, like apartment complexes, report even positive payment records.
Experian recently acquired one of the largest of these, Rent Bureau, and says that Rent Bureau reports are now being incorporated into Experian-reported credit scores. Of course, mortgage lenders typically rely upon the middle of your three bureau scores, so there’s a good chance that the Experian score will not be the one that matters.
But if you are simply trying to document your positive payment history in a formal way, you might consider offering to make your payments through a property manager that reports to Rent Bureau or a similar service, and offer to defray any costs the landlord/seller incurs to do that. Many local landlord associations offer resources that can help.
How credit inquiries affect FICO scores
June 08, 2012 05:30PM
By Kenneth R. Harney
In a marketplace where lenders are demanding record-high FICO credit scores — Fannie Mae and Freddie Mac are averaging around 760 on approved mortgages this year — are you a little fuzzy about what can push your scores up or down?
Take “inquiries,” which Fair Isaac Corp., the developer of the iconic score methodology dominant in the mortgage field, says are among the most widely misunderstood components of its system. Do multiple inquiries — requests by lenders and others to pull your national credit bureau reports — knock your score down? Do you know whether your lender is entering the correct code to minimize damage to your score when you’re shopping for a mortgage and generating lots of inquiries? If you’re young or otherwise new to the world of credit, could multiple inquiries do enough damage to prevent you from getting approved for a home purchase?
Given the importance of maintaining high scores, FICO senior scientist Frederic Huynh agreed to run through the key rules governing how inquiries affect homebuyers and mortgage applicants in an interview with me and a post on Fair Isaac’s Banking Analytics blog.
Start with the basics: Yes, racking up large numbers of inquiries can lower your score. The FICO models consider them significant because extensive behavioral research has shown that “consumers who are seeking new credit accounts are riskier,” more prone to defaults, according to Huynh. “Statistically people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports,” he said. So inquiries do matter.
But this doesn’t mean that if you’re shopping for a home loan or refinancing, and six lenders pull your credit reports, that you’re going to be hit with six separate inquiries and have your score lowered. The FICO models, says Huynh, ignore all mortgage-related inquiries during the 30 days immediately preceding the computation of the score. All mortgage inquiries during the 45 days preceding your loan application only count as no more than a single inquiry. The same buffer zones cover shopping for auto loans and student loans — but no other forms of credit.
In any event, says Huynh, a single inquiry usually is not a big deal, knocking less than five points off your score per pop. But experts in the credit-reporting field say that despite FICO’s good intentions, bad things can happen on inquiries. This is especially true for people with “thin” credit files, such as young, first-time homebuyers and others without extensive credit histories. Larry Nelson, owner of KCB Information Services in Pekin, Ill., a credit reporting agency active in the mortgage field, says a recent applicant lost her pre-approved home loan at closing because five new inquiries for an auto loan suddenly appeared on her credit reports. This deflated her FICO score to 610 — a loss of 30 points and put her below the minimum score required for the mortgage.
How could this happen, since auto loans are one of the three protected classes of credit where multiple inquiries within a short time period are OK? According to Nelson, unless loan officers properly code the purpose of the inquiry when they report it to the national credit bureaus — an auto loan in this case — it won’t necessarily be identified in credit files that way. Nelson’s homebuyer had double bad luck: None of the inquiries that should have been covered by the 30-day buffer carried the correct purpose identification. Plus Fannie Mae and Freddie Mac have begun requiring lenders to pull a second set of credit reports immediately before closing to ensure that applicants’ FICO scores haven’t changed significantly. In this case, there was a sudden spike of score-injuring inquiries in the bureaus’ files and the buyer couldn’t close on the loan.
Nelson says glitches like this “are becoming more commonplace” and can hurt unwary consumers. He strongly urges mortgage applicants to avoid all credit-related shopping — for credit cards, furniture, home improvements, you name it — in the weeks before their closing because a string of inquiries can mount up and knock the home purchase off track or delay it.
Of course not all inquiries indicate active credit seeking, says Huynh, even though your files are accessed. For example, if you’re checking on your credit before applying for a mortgage — either through www.annualcreditreport.com, where they are free once a year — or by simply buying them from Equifax, Experian or TransUnion, your FICO score goes untouched.
Buying a home won’t get much cheaper
By Les Christie @CNNMoney May 3, 2012
Several housing experts are predicting that this year will be the last chance for homebuyers to cash in on the weak housing market.
NEW YORK (CNNMoney) — Buying a home may never get any cheaper than this. Several housing experts are predicting that this year will be the last chance for bargain hunters to cash in on the best deals of the weak housing market.
You can always find Luxury Villas for sale in Hua Hin for the best price on propertysolutionshuahin.com, but as of now in the US home prices are down by 34% nationally since 2006 and mortgage rates at historic lows. This means, homes have never been more affordable — but it won’t stay this way for much longer. So, check out this page, sell your unwanted property and buy your new home asap.
Stuart Hoffman, chief economist for PNC Financial Services (PNC, Fortune 500), said he expects home prices to flatten out by the third quarter and start climbing by next year.
A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.
Some economists, like Trulia’s Jed Kolko, expect home prices to pick up even more quickly. Trulia’s data shows that the national average for asking prices already increased 1.4% in the first quarter of 2012, compared with the last three months of 2011.
Mortgage payments at lowest level in decades
“This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer,” he said.
Prospective homebuyers who’ve been sitting on the fence shouldn’t worry if they aren’t quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.
Hoffman, for example, is forecasting a 2% increase in 2013 compared with 2012. Meanwhile David Stiff, chief economist for Fiserv, predicts that prices will turn in the last quarter of 2012 and will rise 4.2% for the 12 months through September 2013.
Foreclosures start to fade. One major factor that will drive the trend is the cooling of the foreclosure crisis. Stan Humphries, chief economist for Zillow, said that the percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.”
That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.
Before things slow down, however, buyers should brace themselves for a temporary spike in the number of foreclosures as banks start expediting the processing of hundreds of thousands foreclosures that were stuck in the system following the robo-signing scandal. That backlog should move more quickly now that new guidelines for processing foreclosures have been outlined in the $26 billion foreclosure settlement.
Many of the bank-owned properties currently coming out of the foreclosure pipeline are being snapped up by investors who are fixing them up and renting them out — often to those who were displaced by the foreclosure of their own home. That has helped to lift prices on foreclosed properties, according to Alex Villacorte, the director of analytics for Clear Capital, which specializes in housing market valuations.
Home buying much cheaper than renting
“That could have a significant impact on the market overall in terms of providing a rising floor to home values,” he said.
In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.
“It’s crazy,” said Tanya Marchiol, founder of Team Investments, a Phoenix real estate investing firm. “Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000.”
Miami saw a 4.6% increase quarter-over-quarter through April, and Tampa, Fla., was up 4.4%, according to Clear Capital.
Goodbye 3.8% mortgage. In addition to home prices, mortgages could also move higher.
Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low.
But rates aren’t expected to remain at these record-low levels much longer. As the economy continues to recover, rates will move higher, said Doug Lebda, CEO of LendingTree, the online lending site. Although, he said, they will “stay very reasonable.”
The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.
Greater demand for loans will help fuel the increase, according to Lebda.
6 Ways to get a great mortgage deal
Even though mortgage rates have been cheap, borrowing for home purchases has been sluggish. The Mortgage Bankers Association estimatesthat homebuyers will take out mortgage loans totaling about $415 billion this year, an increase of less than 3% compared with 2011. Next year, however, it forecasts that amount will almost double to $706 billion.
As housing markets stabilize and prices stop falling, homebuyers will be even more confident about buying, said Humphries.
“People can now see the light at the end of the tunnel,” he said. “And that can be enough to get them off the fence.”
Esteemed Judgment, Debt Attorney Abel L. Pierre Joins The Credit Repair Experts at Better Qualified
Abel L. Pierre Brings a Decade of Practical & Legal Experience and Combines that with Over 40 years Case Law to Bolster Consumers’ Abilities to Fight the Credit Bureau Giants.
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Apr 30, 2012 –
NEW YORK, NY— Over the past several years, Better Qualified, LLC has developed a proven track record within the credit restoration and Identity Theft services industry. Better Qualified’s unyielding dedication to their customers and integrity has truly set the bar for the industry as a whole. Earlier this month, Better Qualified has raised that bar. In an effort to continuously provide stellar service to their clients, Better Qualified has secured the commitment from prominent debt consultant Abel L. Pierre.
When it comes to credit scores, credit reporting, and debt, Hibberts Commerical Solicitors have their ear to the ground. A former adjunct professor of law, Abel L. Pierre regularly speaks to community groups, houses of worship and tenant associations regarding a myriad of debt issues from consumer lawsuits, credit reporting problems, foreclosure defense, and debt collection harassment. When a person complains about a unique issue, Mr. Pierre doesn’t just tell them to go to court, he goes with them. Mr. Pierre walks into court with a decade of legal experience as a licensed attorney. Mr. Pierre has recovered monetary awards on behalf of his clients, who have suffered the calamities of the burden of debt.
“We have been providing a great service to our clients and they were happy with our results for the past 6 years but, we realized that having an attorney working for our clients makes us even better,” says CEO Paul Oster. “Abel is an industry expert and his knowledge and expertise should help improve our client’s credit scores so, they can get better interest rates for mortgages, credit cards, insurance premiums, etc”. Mr. Pierre said in response, “Better Qualified’s great reputation speaks for itself. I am eager to help them provide the kind of service to their client’s that some companies only claim to deliver. All too often, you need someone with unique insight and experience into the myriad of laws that debt burdened clients deals with. That’s what I bring to the table.”
Background:
Founded in 2006, Better Qualified has become a leader in credit restoration and identity theft resolution services. Better Qualified is headquartered in Eatontown, New Jersey, with licensees across the country.
Since founded, Better Qualified has maintained an excellent track record of success and offers a 100% money back guarantee. The business has an A rating from the Better Business Bureau.
Contact:
Abel L. Pierre, Esq.
Law Office of Abel L. Pierre
Attorney-at-
Better Qualified, LLC
19 Christopher Way
Eatontown, NJ 07724
Tel: (732) 203-7377
Email: info@betterqualified.com