What do we look at when we talk about credit?
By: Lynn Procaccini

Traditional credit which is found on national credit reports or supplied by the borrower.

Conventional, FHA and VA financing

Revolving and Installment debt: minimum standards are 12 months with zero late payments on all accounts. If there is an occasional late this must be explained and verified as isolated mishap, possibly related to income, i.e. gap in employment, lay off, or health reason to yourself or a significant family member. All credit inquiries and blemishes must be addressed, with explanations.

NO Credit: Alternate credit forms are used to establish credit and savings patterns. Rent and utilities are a few of the nontraditional credit sources. See the list of alternate credit options below. No credit is not so bad anymore.

Alternate forms of credit gathering:

• Rent (canceled checks)
• Utilities: Electric, Gas Telephone and Cable TV.
• Medical, Auto, Life and Renter's insurance
• Local store credit
• Personal property tax
• Medical and dental bills
• Child care
• Employer and 401 K loans

Less than perfect credit: Charge offs: All accounts must be brought up to date prior to closing. Previous payment arraignments on charge off's are acceptable with at least a 6 month history of payments on these accounts. You are showing the ability to repay and take responsibility for these debts. Negotiating a payoff as payment in full may also be acceptable with a good explanation, i.e: divorce, lost employment, accident, medical and excellent compensating factors, and overall credit.

Federal and state tax liens: Must be released ( paid in full). With an acceptable explanation it is possible to pay this lien off from another source, as long as you are within debt guidelines

Bankruptcy: Minimum 2 years from discharge, with acceptable explanation. Required for conforming lending is reestablished credit, i.e. opened after the bankruptcy. Borrower must maintain good credit with zero late payments on all active accounts. The guidelines are just that, If there is exceptional recovery with Extreme circumstances, exceptions to these minimums will be considered.

Less than, less than perfect credit: Severe problem credit: There are other programs that you may fall into with current or recent late payments. The down payment and premium rates are always a factor with these type of loans. It is a great way to get into a property that your ordinarily would not have been able to. Maintain excellent payment and set yourself up to refinance down the road.

Installment and revolving debt up to 4 x 60, 2 x 90 but discretionary, 2 years since discharge and 2 years since foreclosure of deed in lieu.

Bankruptcy discharged after 6 months.

Many of these programs will vary depending on how much of a down payment is required. The severity of your credit will dictate the program.

Steps to qualifying your current credit situation

1) Obtain a copy of your credit:

Equifax
Credit Information Services
P.O. box 740256
Atlanta, GA 30374-0256
Phone: 1-800-685-1111
Web Site: www.equifax.com

Experian
National Consumer Assistance Center
P.O. Box 949
Allen, TX 75013-0949
Phone: 1-800-682-7654
Web Site: www.experian.com

Trans Union
National Disclosure Center
P.O. Box 390
Springfield, PA 19064
Phone: 1-800-888-4213
Web Site: www.tuc.com

2) Dispute anything you believe to be inaccurate or damaging

3) Offer to settle/or arrange payment plans, on all outstanding Charge offs and bring all past dues current.

4) Add good credit references that do not appear on the report.

5) When applicable, add 100 word consumer statement to your report for any problem accounts that remain. Explaining wrongful delinquency can sometimes be looked at in a different light.

This five step process has proven to be very effective.