Buying a car before buying a home.
It's not uncommon for people to shop for cars at around the same time that they look into buying a home. For most people, getting a home mortgage will be significantly easier if the car purchase occurs after the home purchase.
Letting credit be checked multiple times.
You'll often hear that when car dealerships pull your credit it only counts as one inquiry as long as all of the inquiries take place within a 30 day period. Some credit counselors disagree, and recommend that you pull your own credit so that you can hand over those scores when shopping for car loans.
Letting anything go to collection (even if the charge is inaccurate.)
Liz Pulliam Weston wrote a great
article in MSN Money about raising credit scores, in which she recommends paying even inaccurate charges rather than letting them go to collection. (Better to follow up later in small claims court, she says.) By the same token, throwing a $30 parking ticket into the glove compartment and forgetting to pay it can easily drop your score by 50 points if it gets sent to collection.
Not automating payments for items that show on credit reports.
Some late payments count more than others when it comes to credit scores. A utility bill, for example, can be over 30 days late and not affect your score, whereas a payment on a credit card account or home mortgage that is over 30 days late shows up automatically.
Closing out credit card accounts.
While it would seem to make sense that closing credit card accounts is a healthy thing, the reporting agencies don't see it that way. Liz Pulliam Weston states in her article that closing out accounts won't help you, and may actually drop your credit score.
Credit Repair Fundamentals
Credit reports are notoriously inaccurate. Derogatory credit items can be removed from a credit report if they are shown to be inaccurate, obsolete, or unverifiable. Unfortunately, many people face frustration when they call or email creditors or credit reporting agencies to try to have derogatory items removed.
The key is to dispute derogatory claims in writing. Sending a letter to the credit bureau creates a chain of events that the creditor and credit bureau are legally obligated to pursue within set a set time period. Within 30 to 45 days you can expect your credit report to be re-issued, and at that time you can evaluate whether or not you achieved your desired result. If you did not, submitting another dispute in writing starts the process again.
Tips:
- Communicate in writing. Don't rely on phone and email.
- Don't take anyone's word for it if they say a derogatory item has been removed. Get it in writing, on letterhead.
- Be persistent, and delegate the process if you find you can't keep up with it.
Good Credit Practices
Pull your own credit every 6 months.
This allows you to keep track of your score, check for incorrect items, and protect against identity theft. The best place to get your credit report is from
www.AnnualCreditReport.com. (Many other sites try to charge you for ongoing services.)
Know which accounts show up on your credit report.
Automate these payments to ensure that they are always paid on time.
Keep outstanding balances relatively low.
Stay at or below 37% to 40% of available credit lines in order to not lose points due to high outstanding balances. (Some credit counselors advise staying below 20%.)
Housing-Related Credit Issues
Most credit counselors will tell you that understanding exactly how credit scores are affected by various events is like understanding the inner workings of the Space Shuttle. It also appears that people can be affected very differently by similar credit events. However, here are a few guidelines that typically hold true:
Loan Modification
Getting a loan modification generally helps credit scores, since payments and sometimes even loan balances may end up lower.
Short Sale
Before June 25, 2008, foreclosures and short sales were treated the same in terms of credit scoring. There is still enormous controversy among financial professionals about whether this has really changed, but Fannie Mae did issue explicit guidelines in June of 2008 that made it easier to purchase a home after a short sale.
Specifically, after a short sale in which the mortgage was not delinquent but the home simply had to be sold for less than the mortgage amount, and there was no deficiency judgment (the homeowner was not required to repay the amount that was 'short'), the seller can still apply for a home purchase loan that conforms to Fannie Mae guidelines.
If the seller was behind on mortgage payments and then sold short, but there was no deficiency judgment, there is a two-year seasoning period before credit is re-established and that person can apply for a loan that conforms to Fannie Mae guidelines.
Foreclosure
Foreclosure stays on a credit report for seven years, but has less of a negative effect as time goes on. Credit experts typically advise people to expect a credit score drop of 200 to 300 points in the beginning.
The Bottom Line
Always consult with a competent, qualified professional regarding anything that affects your credit score. Opinions vary even among the well informed, so the best recommendation is to research issues carefully and be as aware as possible of all of your options.
Staging Tips for Great Home Photos
The camera makes your home look 'fatter'!
We've all heard that the camera makes the average person look around 10 lbs heavier. Did you know that it has the same effect on the rooms in your home? In general, at least 30% of the items in a typical home need to be cleared out in order for room photos to look uncluttered.
Smaller items lose context in photos.
A photo packs a large amount of information into a small surface area, and small items that make sense when you're standing in a room can easily become unrecognizable. A key concept is that anything in a photo that makes a viewer think, "What is that?" takes away from your marketing message and should be removed, if possible.
Items in the foreground appear larger.
Think like a camera. Remove or relocate items that might appear to block view and room flow simply because they appear disproportionately large in the foreground.
Beware of bedspreads that take over the room.
A busy pattern on a bedspread can be very distracting. A large bed often takes up 30% to 40% of the surface area of a bedroom photo, so the bedspread needs to be somewhat understated in order to compensate for that.
Take 'before' photos of each room.
Take photos of each room, and identify smaller items that lose context. Remove them, shift furniture to enhance room flow if necessary, and take the photo again. Chances are you'll notice a big improvement! (You'll probably also notice items that didn't attract attention before, but that you now realize could be removed as well.) Rinse and repeat...
Your FICO 08 credit score determines your ability to qualify for a loan, the size of the loan, and the interest rate. FICO scores range from 300 to 850, with 60% of people having scores between 650 and 799.
