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Every mortgage has guidelines for a short sale or
loan modification.
Knowing the options contained in the guidelines is the
first important step. |
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The mortgage service company that collects your mortgage
payment each month works only for the owner of your
mortgage loan. Most of the time the mortgage
service company does not own your mortgage but acts as a
collection agent for the real owner of your mortgage
loan.
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Credit Scores |
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While a credit report can be considered your detailed financial
history, a score is an objective summary of that information. It
represents your creditworthiness as a number. Numerical weights
are placed on different aspects of your credit report and a
mathematical formula or computation is used to arrive at a final
score. There are literally thousands of score models used in the
credit industry which consider different variables for different
types of credit. Credit bureaus offer several different types of
scores in their product portfolio, appealing to the vast array
of creditors and credit applications in the country. A
government program allows you to get a free credit report.
What Effects Credit Scores
A credit score or credit bureau risk score is based on
information drawn from your credit report. About 30 individual
factors are used to determine the score. Certain factors, such
as payment history, have more weight than others, such as the
length of your credit history. However, a factor may be more
important to your credit score than to someone else's score
because of differences in individuals' credit reports. Also,
each factor's importance can change as your credit report
changes. The five major factors are:
Payment history
Payment information on credit cards, installment loans (such as
a car loan), mortgage loans or finance company accounts. Are
there public record items, such as judgments or bankruptcy, and
collection items? Details on late or missed payments, including
how much was owed, how late the payments were and how recently
they occurred. How many accounts show no late payments.
According to Fair Isaac, this category usually determines about
35% of your score.
Keep your debt reasonable. One rule of thumb: for a good credit
score, your account balances should be below 75% of your
available credit. For example, if you have a $2000 credit limit,
you should have a balance of no more than $1500.
Outstanding debt
Amount owed on all accounts and on different types of accounts,
such as credit cards or installment loans. How many accounts
have balances? How close are you to each credit limit? According
to Fair Isaac, this category usually determines about 30% of
your score.
Credit history
Blemished credit history and how long since you used each
account? According to Fair Isaac, this category usually
determines about 15% of your score.
Pursuit of new credit
How many inquiries and new accounts does your report show, and
how recent are they? How long has it been since the most recent
inquiry? Whether you have made on-time payments to re-build your
credit after a period of frequent late payments. According to
Fair Isaac, this category usually determines about 10% of your
score.
Types of credit in use
How many accounts are reported for bank cards, travel and
entertainment cards, department store cards, installment loans,
and so on. According to Fair Isaac, this category usually
determines about 10% of your score.
Issues that effect your credit score
- Amount owed on accounts is too high.
- Delinquency on accounts.
- Too few bank revolving accounts.
- Too many bank or national revolving accounts.
- Too many accounts with balances.
- Consumer finance accounts.
- Account payment history too new to rate.
- Too many recent inquiries in the last 12 months.
- Too many accounts opened in the last 12 months.
- Proportion of balances to credit limits is too high on
revolving accounts.
- Amount owed on revolving accounts is too high.
- Length of revolving credit history is too short.
- Time since delinquency is too recent or unknown.
- Length of credit history is too short.
- Lack of recent bank revolving information.
- Lack of recent revolving account information.
- No recent non-mortgage balance information.
- Number of accounts with delinquency.
- Too few accounts currently paid as agreed.
- Time since derogatory public record or collection.
- Amount past due on accounts.
- Serious delinquency, derogatory public record, or
collection.
- Too many bank or national revolving accounts with
balances.
- No recent revolving balances.
- Proportion of loan balances to loan amounts is too high.
- Lack of recent installment loan information.
- Date of last inquiry too recent.
- Time since most recent account opening too short.
- Number of revolving accounts.
- Number of bank revolving or other revolving accounts.
- Number of established accounts.
- No recent bankcard balances.
- Too few accounts with recent payment information.
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Getting Your Credit Report |
There are three major credit reporting agencies, Experian,
TransUnion and Empirica. A credit reporting agency is a
clearinghouse for credit history information. Credit grantors
provide the agency with factual information on how their credit
customers pay their bills. Merchants, banks, mortgage companies,
lending institutions, credit card companies, bankruptcy courts
and courts are only some of the sources that send credit
information about you to the credit reporting agencies. The
agency assembles this information, along with public record
information obtained from courthouses around the country, into a
file on each consumer. In return, credit grantors can obtain
credit reports about consumers who wish to open accounts with
them.
How to get a copy of your credit report
You can easily get a copy of your own credit report. When
requesting a copy of your credit report by mail, be sure to
include your full name, address, Social Security number and most
recent former address for file matching purposes. The is a
fee for ordering a credit report directly from a credit bureau.
Trans Union
P.O. Box 1000
Chester, PA 19022
800-888-4213
http://www.transunion.com/
Equifax General Information Services, Inc.
PO Box 740201
Atlanta, GA 30374
800 685-1111
http://www.transunion.com/
Experian
P.O. Box 2002
Allen, TX 75013
888 397 3742
http://www.experian.com/
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How to Get a Free Credit Report |
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Beginning 2005, you can get a free copy of your credit report.
The Fair and Accurate Credit Transactions Act (FACTA) of 2003
and the Fair Credit Reporting Act (FCRA), as amended, provide
for you to get a free annual copy of your credit report.
The Federal Trade Commission has directed Equifax, Experian
and Trans Union to provide you with a free copy of your credit
report. You are entitled to receive one free credit file
disclosure every 12 months.
There are three ways you can order a free copy of your credit
report:
- Call 877-322-8228
- Go online to:
https://www.annualcreditreport.com/cra/index.jsp
- Complete an Annual Credit Report Request Form and mail
it to: Annual Credit Report Request Service, P.O. Box
105281, Atlanta, GA 30348-5281.
Be aware.
There are many scams associated with getting your free credit
report.
Be very cautious in sharing your personal information with any
company. |
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