This BLOG On How To Improve Credit To Qualify For Mortgage California Was UPDATED On January 10th, 2019
California was one of 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 have 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. In this article, we will cover and discuss how to improve and re-establish credit to qualify for a 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
- The most veteran experienced can show borrowers on How To Improve Credit To Qualify For Mortgage for no charge
All loan officers at Gustan Cho Associates are experts in helping borrowers on How To Improve Credit To Qualify For Mortgage.
Loan Officers Can Help Borrowers With Re-establishing Credit At No Cost
Our Loan Officers at Gustan Cho Associates 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
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 credit payment, the chances are almost nil that it can be deleted.
Contacting Creditor To Ask Them To Remove The Late Payment As A One-Time Courtesy
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 the 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
- The 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.
How To Improve Credit To Qualify For Mortgage And Credit Disputes Halt Mortgage Process
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
- Borrowers who are applying with a lender with no 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 And How To Improve Credit To Qualify For Mortgage
Home Buyers with bad credit can qualify for a mortgage with bad credit at Gustan Cho Associates Mortgage Group. We are direct lenders with no overlays on government and conventional loans. Contact us at 800-900-8569 or text us for faster response. Or email us at firstname.lastname@example.org. 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 a mortgage.