Ways to rebuild your credit
This may be your golden opportunity to re-establish your credit...recover from overwhelming debt...or consolidate your high-interest debt into one easy, low-interest monthly payment. Because you may qualify for a mortgage at an affordable rate! We specialize in helping homeowners repair their credit... putting them on the road to recovery. Even if you've been turned down for a home loan before - or don't think you can qualify - we can help!
You may be able to qualify for our loan programs even if you fall into any of the categories below:
- Bankruptcy
- Mortgage Lates
- Judgements
- Liens, Charge offs
- Collection accounts
- Foreclosure
- Medical bills
- No credit
Don't wait! Apply Now! Not sure what credit grade (A, B, C, D) you fall into? Our online credit grader can rate your credit in a few simple steps!
There are some things you can do to restore your good credit. Here are several ways you can rebuild your credit.
1) Make sure your credit file is accurate.
Credit files are maintained by 3 large credit-reporting agencies - TRW, Trans Union and Equifax. You can contact one of them and request a copy of your credit report for a small fee. Review the report for errors and outdated information. If you feel any of the reported data is inaccurate, you can request that the data be removed. The credit-reporting agency will contact the creditor who has 30 days to respond and confirm the disputed items. If they do not verify it, the data will be deleted. If the creditor verifies that the information is accurate, you can write a 1 00-word statement explaining your side of the story and have the credit-reporting agency include it in your credit file.
2) Contact your creditors.
Some creditors will remove derogatory information from your credit file if you pay a full or partial payment toward the debt. They may also 're-age' the account by making the current month the first repayment month and will show no late payments. You can call the creditor directly to do this.
3) Add positive information to your file.
Send information to the credit bureaus that shows stability and the ability to make payments on time. For any accounts that do not show on your credit report that you pay on time, you can send account statements and copies of cancelled checks to show your payment history and the credit bureaus may add them to your file. If you have long-term employment, have lived in the same place for a length of time, etc., be sure to add documentation to your file that shows this stability.
4) Get credit in your own name.
If you are married and your spouse has had financial problems, be sure that you establish good credit in your name alone.
5) Re-establish good credit.
If you've had credit problems in the past (especially a bankruptcy), it is important that you re-establish good credit. There are several ways to do this including:
a. Get a secured credit card.
Many banks will, in exchange for a sum of money deposited with them, give you a credit card. Use the card and make your payments on time. Your credit rating can quickly improve.
b. Obtain a secured loan.
If you have a passbook savings account or can open one, ask the bank to give you a loan against that money. They keep your passbook until the loan is paid in full. Make sure the bank reports on the loan to the credit bureau.
c. Work with a local store.
Some businesses will give you credit on a purchase regardless of your credit standing. Although you may pay a higher rate of interest, this is another way of re-establishing good credit.
6) Satisfy judgments, liens and collections.
Make it a priority to satisfy any unpaid items against you.
Guide to Consumer Credit ReportsProbably the most important factor considered for loan approval is an applicant’s credit history. Your credit history will determine the amount of credit granted to you and the interest rate you will pay. If you have delinquent credit, chances are there will be difficulty in securing financing. You may not qualify at all; it is very important that you are aware of your credit status. The following information has been compiled by Capital Mortgage Finance in an effort to help our clients understand the credit reporting process and what can be done to improve their situation. The information contained in this report is deemed reliable but is subject to change; if you have any questions, contact your Capital Mortgage Finance Corp. representative.
The Credit Repositories
There are three credit repositories that collect information from creditors around the country. The repositories are Equifax, Experian, and Transunion. Equifax is the primary repository for the state of Maryland. Equifax issues a Beacon score; Experian and Transunion issue Fair Issac and Empirica scores, respectively. Scores generally range between 350 (low) and 850 (high). You are entitled to a free copy of your credit report from each repository on an annual basis.
To order your report, contact any of the repositories directly:
Equifax 800-807-3848
Experian 800-422-4879
TransUnion 800-516-8289
Credit Scores
Credit scores have been issued for over five decades; the merging of information led to the establishment of the major credit bureaus. It was not until the 1990’s that credit scoring became a major component of criteria for credit approval.
Scores are based on the following criteria:
1) Number of Open Credit Lines - How many creditors have granted you a line of credit? Someone without a credit line or a history of a credit line would not have a credit score.
2) Credit Balance vs. Credit Limit - How much do you owe versus how much credit has been granted to you? Someone with a high balance to credit limit ratio would generally have a lowered score.
3) Length of Credit History - Were black and white TV’s still popular when you established credit or did you receive your first credit card last week? Someone who has recently acquired a large amount of credit may have a reduced score if they lack a history of being able to pay their obligations in a timely manner.
4) Actual Credit History - How often have you met your obligations? Are you on time each month? Do you have any outstanding debt? All of these are factors considered as your credit history.
5) Number of Credit Inquiries versus Number of Open Credit Accounts - How many times have you applied for credit? How often was credit granted or denied? Someone who has several inquiries and few open accounts as a result may indicate a rejection of credit. This, of course, would also lower a score.
It is important to point out that credit scores are not based on income or assets nor are scores based on sex, race, nationality, or religion. Scores are based simply on your credit history.
Why Credit Scores?
Credit scores actually expedite the loan approval process. Prior to the widespread use of credit scores, underwriters needed to spend a significant amount of time analyzing the credit report. Credit scores allow for an objective decision rather than a subjective one. Credit scores are deemed to be an accurate assessment of one’s credit history and the likelihood of repayment in a timely manner. A lender can quickly determine which applicant fits their criteria for credit by simply looking at the applicant’s score. A credit score is sometimes referred to as a “FICO Score.”
Lenders/Creditors Select Credit Criteria
Lenders & creditors select the criteria that determines the credit score. It would not be uncommon for a lender and a creditor to order your credit report on the same day from the same repository with the end result being significantly different scores. Unfortunately, lenders and creditors do not have to reveal the criteria they select for credit scoring. The selection of the criteria used for credit scoring, however, is done in advance and not at the time of your credit application.
Score Range
Credit Scores have become an important factor of credit approval, with the assumption that the higher the score, the lower the risk. Scores range on a scale of 350 - 850. Generally scores below 620 are considered high risk borrowers. Studies have shown that borrowers with scores of 620 & lower account for a majority of bad debt / collection accounts.
Which Score is Used?
Since there are three credit repositories, credit scores can vary. There can be a significant variation of scores; generally mortgage lenders will utilize the “middle score.” Other creditors, such as auto finance companies, will use the credit score from the repository that is predominant in the state. In Maryland, the predominant repository is Equifax.
Statute of Limitations
Accounts that have been inactive for 7 years or more must be removed from your credit report. If you paid an account in full and have not made any charges to the account in the last 7 years, you can request that the credit bureau remove the information. Any public record, such as judgements, tax liens, record of arrest and indictments must be removed from your credit report after 7 years as well. Bankruptcies, regardless of chapter, must remain on a credit report for 10 years after the discharge date.
Credit Disputes
As mentioned earlier in this report, you have the right to request a free copy of your credit report with any of the credit bureaus. You are entitled to the free report once a year. If you feel any information is inaccurate, you may dispute the claim. You may contact the bureau directly, but you will need to send written record of your disputes.
To dispute credit by phone, call:
Equifax 800-807-3848
Experian 800-422-4879
TransUnion 800-516-8289
Mail your disputes along with evidence supporting your claim to:
The credit repository will investigate your claim and respond within 30 days. They will contact the creditor to verify your claim. If the credit repository is unable to contact the creditor, the repository will remove the information. If, however, the creditor resubmits the information to the repository, the repository will again list the information. It is rare that this happens, but it is something to keep in mind.
If you contest the information and despite your earnest efforts, the derogatory information remains on your report, you may write a 100 word explanatory statement that will be added to your credit report. This statement will offer creditors your version of any credit delinquency that you dispute. Contact the credit repository via phone and then mail your explanation to the repository.
Bureau Accuracy
Credit Reports are not 100% accurate. Many factors contribute to the inaccuracy of credit reports. Creditors are not required to continually update information. Your credit information is usually updated every three months. Some accounts may not be displayed on your credit report; a creditor may report to one repository, such as Equifax, but not to Transunion or Experian. You may have paid a collection two years ago but the repository still has it listed as a bad debt. Your balances may be much lower than the records held by the repository. Perhaps you have a common name, such as James Robinson or Sally Jones; or maybe you are named after one of your parents. “Misplaced” credit information is a common occurrence.
All of the above are reasons why you should do a credit “check-up” annually. There is no cost to you, and it may very well protect your credit rating. The better your credit score, the more money you save. Creditors will offer the best financing programs to those with above average credit. The money you save in interest can really add up over time. For example, Bank A offers an auto loan of $ 20,000.00 at 6.5% for five years. Bank B offers a loan of $ 20,000.00 at 12% for six years. Both have monthly payments of $ 391.00. The total cost, however, amounts to a difference of $5,000.00. Which would you prefer?
Who Can Request Your Credit Report
Any company, agency or individual with your signature granting permission and with the purpose of:
1) Securing a credit transaction - A bank or credit card company will request your credit report to insure that they will be repaid in a timely manner if you have applied for a loan.
2) Underwriting Insurance - Statistics show that those with lower credit scores are more likely to file claims. If your credit is less than desirable, you may have to pay a higher rate for insurance or your application may even be declined.
3) Employment Background Check - Due to insurance purposes, some employers may require a better than average credit rating for employment.
4) Collection of an account that is past due - If an account is past due, the lender may conduct a credit investigation in an attempt to determine a reason for the delinquency.
It is important to remember that your signature at application is sufficient permission for creditors to request your credit report. Regardless of any promotional gifts, you should refrain from applying for credit unless it is absolutely necessary.
Alternate Sources of Credit
If you attempt to apply for credit and you are denied due to a lack of credit history or a delinquent credit history, consider submitting alternate credit sources to the credit bureau. Alternate sources are cable, auto insurance, pager, cellular phone, and utility bills. These liabilities are not typically reported to the credit bureaus. Be sure to keep payment records; you may even request a payment history from most companies.
Selling Your Credit Information
You may wonder why you receive so many offers of credit in your mailbox. Creditors purchase mailing lists from compilers around the country. If you have excellent credit for example, your name & address will be pooled with others who have excellent credit. A bank who wants only “A” credit borrowers will then purchase that list and solicit consumers for their business. Since delinquent credit histories are becoming great in numbers, many lenders have begun offering high-cost credit programs to these borrowers as well. The “sub-prime” lenders will purchase lists of consumers who fit this type of criteria as well.
You can prevent the sale of your information by contacting the credit bureaus directly. Once your request is processed, your mailbox should be free of the “junk” that clutters it.
Consumer Credit Commissioner
If you are experiencing difficulty resolving a credit issue with either the creditor or credit repository, contact your state credit commissioner. You may also request a free credit report on an annual basis.
| Maryland |
Delaware |
North Carolina |
| H. Robert Hergenroeder, Jr. |
Consumer Affairs Div. |
Banking Commissioner |
| 501 St. Paul Place |
820 N. French Street |
702 Oberlin Road |
| Baltimore, MD 21202 |
Wilmington, DE 19801 |
Raleigh, NC 27605-1129 |
| (410) 333-6830 |
(302) 577-3250 |
(919) 733-3016 |
| Pennsylvania |
Virginia |
West Virginia |
| Consumer Advocate Office |
Consumer Affairs |
Consumer Protection Div. |
| 1425 Strawberry Square #14 |
2100 Clarendon Blvd. #310 |
812 Quarrier Street #6 |
| Harrisburg, PA 17120 |
Arlington, VA 22201 |
Charleston, WV 25301 |
| (717) 783-5048 |
(703) 358-3260 |
(304) 558-8986 |
| District of Columbia |
F T C |
Comptroller of the Currency |
| Consumer Affairs Group |
CRC 240 |
Customer Assistance Group |
| 614 H Street, NW |
Washington, D.C. 20580 |
1301 McKinney Street #3710 |
| Washington, DC 20001 |
877) FTC - HELP toll free |
Houston, TX 77010 |
| (202) 727-7247 |
http://www.ftc.gov |
(800) 613-6743 |
|
|
http://www.occ.treas.gov |
Good Advice
Your scores are subject to change; the best advice is to pay your bills when due and do not over- extend yourself. Too many have been misled by introductory payment plans that significantly increase after six months. The end result is payment shock; it is no coincidence that the rate of bankruptcy filings substantially increased with the onslaught of credit card programs marketed to credit hungry consumers during the 1990’s.
Prepare a budget for yourself; treat your personal finances in the same manner that a large corporation would. Know what you can afford before even applying for credit. Reduce the number of credit cards you have; only one is necessary since most merchants will accept major credit cards. Be prepared to pay down your debt as quickly as possible; it will save a significant amount of money over time.
Keep receipts and billing statements and compare at the end of the month. Be sure to question any charges that seem suspicious. Once a quarter (every three months), send copies of your billing statements to the credit bureau. This will help insure that your balances are accurate.
Protect your credit and your credit will protect you! You will receive better credit programs with better rates. You will prevent the stress caused by financial difficulty. And best of all, you, not the creditor, will be in control of your financial future.
What to Do If You Are Unable to Meet Your Credit Obligations
Unfortunately, many people find themselves in this situation and do not act until it is too late. With a surging economy, consumers have been credit “happy” for many years. They continue to borrow until soon they are living “check-to-check” to simply pay their bills. It is no coincidence that the rate of Bankruptcy filings has significantly increased in recent years.
If you feel as if you are falling behind, contact your creditors. Ask to speak with the Hardship Department. Many will be willing to workout a payment plan that will fit your budget. Show that you are willing to work with them and they will work with you. It would cost the creditor more to pursue you for a debt through litigation, which is incentive for the creditor to work with you. Be sure to write down the name of the company, representative, date and time of your call as well as the outcome of your request.
You may also want to contact a credit / debt counseling service. They will act as an agent on your behalf and work out a payment plan with your creditors. It is the option of the creditor to accept the payment plan. Each month, you will either make a payment to the counseling service or they will debit your bank account. The counseling service will then make payments to the creditor and a monthly statement will be issued to you. This will continue until either your debt is paid off or you elect to withdraw from the counseling service.
As a last resort, you have the option to file bankruptcy. Consumers may file either Chapter 7 or Chapter 13 Bankruptcy. Chapter 13 is a restructuring of debt; you are still obligated to repay the debt. Chapter 7 discharges debt; your are released from any responsibility for your debts. Filing bankruptcy will seriously affect your credit rating for a number of years. A consumer who has filed Chapter 7 Bankruptcy, for example, must wait a minimum of 24 months from the date of discharge before a lender will approve their mortgage application.
If You Have Filed Bankruptcy
Be sure to keep accurate records of your bankruptcy filing; you will need such documents if you attempt to secure a mortgage loan. Once you are discharged from the bankruptcy, be sure to notify the credit repositories mentioned previously in this report. Many times, a consumer will be discharged from a bankruptcy, yet an account included in the bankruptcy will continue to show as a bad debt, charge-off, or collection. This will definitely affect a consumer’s score, and can sometimes hamper any efforts by the consumer to reestablish good credit.
If you are able to secure credit after you file bankruptcy, it is very important that you pay your bills on time. To many creditors, a consumer who is late after a bankruptcy represents a definite risk and one that many creditors will not take. Be sure to keep accurate records of your payments and retain your monthly billing statements. Once a quarter (every three months), send your billing statements to all three repositories; this will insure that your records are updated on a regular basis.
Your Mortgage Solution Source
If you have any questions regarding your credit report or if you wish to explore your mortgage financing options, contact your Capital Mortgage Finance Corp. representative. Our experienced team of professionals will be happy to assist you. Also, be sure to visit the company website www.cmfloans.com on a regular basis. The site is loaded with information including mortgage programs, realtors, builders, title agencies and other real estate vendors.
Look no further; you have found your mortgage solution source!
Our professional staff works with you! Our mortgage programs include a variety of financing options...competitive interest rates...personalized service... We realize that everyone is different. That's why we treat you like an individual - on a one-to-one basis. And it's why our Mortgage Professionals work with you every step of the way. Because everyone has different incomes, asset bases and credit histories.
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