How To Improve Credit To Qualify For Mortgage California

This BLOG On How To Improve Credit To Qualify For Mortgage California Was UPDATED On November 21st, 2017

California was one the hardest hit states of The 2008 Real Estate and Mortgage Meltdown.

  • California also has one of the highest home values in the nation
  • The real estate crash has devastated many homeowners where many were forced to file bankruptcy and lose their homes
  • Property values has dropped more than 50% in some counties of California
  • However, many California home buyers have since recovered.
  • A lot of home buyers had bruised credit but qualified for FHA Loans with credit scores as low as 580 for a 3.5% down payment home purchase FHA Loan
  • Mortgage Interest Rates are based on credit scores
  • Many home buyers needed to at least meet the minimum credit score requirements

There are ways on How To Improve Credit To Qualify For Mortgage

Credit Repair During Mortgage Process

Credit repair companies are popping up everywhere throughout the United States. Since we live in a credit driven society, having good credit is a must. Many consumers want to have their credit repaired to qualify for home loans. There are ways on How To Improve Credit To Qualify For Mortgage without hiring expensive credit repair companies.

  • However, before consumers jump in and hire a credit repair company, they need to really think things through
  • Is hiring a professional credit repair company needed?
  • Credit repair is not cheap and everything a credit repair company can do consumers can do it on their own
  • It is not rocket science to repair credit
  • If a person’s intent is to repair credit so they can qualify for a mortgage, contact a loan officer first
  • There are many instances where credit repair can do more damage than good when qualifying for a mortgage
  • There are certain ways on How To Improve Credit To Qualify For Mortgage
  • Most mortgage professionals know the basics of quick fixes in credit repair
  • Most veteran experienced can show borrowers on How To Improve Credit To Qualify For Mortgage for no charge
  • All loan officers at The Gustan Cho Team at USA Mortgage are experts in helping borrowers on  How To Improve Credit To Qualify For Mortgage
  • Our Loan Officers at The Gustan Cho Team can show borrowers on How To Improve Credit To Qualify For Mortgage and boost credit scores by the following:
    • Pay down existing balances of credit cards
    • Getting one or two secured credit cards
  • Mortgage professionals also may be able to assist in helping borrowers get rid of erroneous credit postings by doing a rapid rescore if borrowers have proof that the credit bureaus are reporting tradelines wrong

Hiring A Credit Repair Company To Delete Recent Late Payments

Mortgage Borrowers with recent late payments in the past twelve months and intend hiring a credit repair company, chances are that they will be wasting their  time and hard earned money. Chances are slim to none in getting the derogatory retracted on an active credit tradeline.

  • Credit repair companies will dispute derogatory items to the three credit reporting agencies by the following methods:
    • Disputing derogatory information is not theirs
    • Then the creditor has 30 days to provide proof or verification that the derogatory item is in fact the consumers
  • In the event if the creditor does not respond to the credit reporting agencies within 30 days, the credit reporting agencies will need to delete the disputed item in question by Federal law
  • Unfortunately, this is a cat and mouse game
  • It is extremely difficult to remove a recent derogatory from credit reports
  • This strategy can be more harm than good
  • I really do not recommend that mortgage borrowers use this technique to delete a recent derogatory item
  • If consumers were in fact late on a credit payment, the chances are almost nil that it can be deleted
  • The best bet is to contact the creditor and ask for mercy and forgiveness by having them remove the late payment
  • See if they will remove the late payment for a one time only basis
  • Consumers who have been consistently late, the chances that the creditor will remove it will probably not be good
  • But cannot hurt contacting the creditor and see if they can remove some of the late payments on credit report

Removing Older Derogatory Items And How To Improve Credit To Qualify For Mortgage California

The older the derogatory credit item is, the easier it is to have it deleted by using the above approach.

  • However, deleting older derogatory credit items will have no positive impact on credit scores
  • The only thing this will do will be making your credit report look cleaner.  
  • Credit repair companies can be successful in removing older derogatory information

Home Buyers do not have to hire credit repair companies to qualify for mortgage. FHA Loans are the most popular loans in the U.S. for home buyers with bad credit.

FHA Loans For Home Buyers With Bad Credit

Going through credit repair during mortgage process can backfire on the mortgage borrower.

There are strict credit dispute mortgage lending guidelines:

  • Under HUD Guidelines, HUD is the parent of FHA, borrowers cannot have credit disputes during mortgage process
  • Reason being is when consumers dispute a credit tradeline, the credit bureaus will automatically discount the negative factor from the consumer credit scoring formula even though the derogatory item remains on the credit report
  • A credit dispute on a credit tradeline will automatically increase consumer credit scores
  • Medical collection accounts are exempt from credit disputes
  • Non-medical collections with zero balances are exempt from credit disputes
  • If borrower has no more than $1,000 outstanding balance on non-medical collections, the disputes on the non-medical collections are exempt from retraction
  • Late payments and charge off accounts cannot be in dispute

In order for the mortgage process to proceed, credit disputes need to be retracted.

  • If consumers retract a credit dispute, the credit scoring formula will re-factor the negative item back to the credit scoring model so the consumer credit scores will drop
  • Mortgage Borrowers who are applying with a lender with no lender overlays can dispute medical collections since medical collections are exempt from credit disputes
  • Credit Disputes on medical collections will boost consumer credit scores

The above reasons are reasons why credit repair during mortgage process can backfire on mortgage borrowers.

Qualify For Mortgage With Bad Credit

Home Buyers with bad credit can qualify for mortgage with bad credit with The Gustan Cho Team at USA Mortgage. We are direct lenders with no lender overlays on government and conventional loans. Contact us at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends and holidays. Our Team can help borrowers with low credit scores qualified by advising them on how to raise their credit scores to qualify for mortgage.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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