“My credit check confuses me. I don’t get this. Look at all these mistakes. This is not good. What should I do?” says Heather of Sarasota, Florida.
Heather and her husband Chris are planning to build their dream home.
They’re excited! Already, they have their land…they have their builder…and they’ve endured the County’s demands for all kinds of inspections and paperwork.
Clearly, they’ve invested their emotions and money into this dream.
But then, something called a mortgage has popped into the picture. Now Heather and Chris are concerned about bank qualifying…they need a mortgage and they have credit issues.
Five years ago, this young couple declared bankruptcy and have worked hard to recover financially, a true success story of what it takes to recover from bankruptcy.
When I sat down with Heather yesterday, her questions turned out to be the same questions I hear every day from other well-educated people who are confused about credit, credit reporting & buying a house. Here’s what you need to know about Heather’s concerns.
I think you’ll want to read more about my suggestions to Heather about keeping their dream alive.
HEATHER & CHRIS GO AFTER THEIR DREAM….
Heather & Chris, as with many other “good” people, suffered financially back in 2003, forcing them to declare bankruptcy. Since, they have gotten good jobs and paid their bills on time.
Yet, they have a BK (bankruptcy) clouding their credit reports. Worse, as I discovered yesterday, Heather and Chris have credit reports filled with inaccurate reporting.
I’m not surprised. Heather, thinking she was doing the right thing, had sent her BK paperwork to the BIG 3.
Suddenly, accounts not included in BK and paid in full and as agreed appeared on their reports as “included in bankruptcy.”
This made their reports look worse, as if they had little or no “good” credit account history. She also showed me examples of re-aged accounts.
Despite all these reporting mistakes, here’s what I recommended to Heather during lunch at Tijuana Flats in Sarasota, FL:
- For mortgage purposes, mortgage lenders will refer to your “middle” score and what’s on your reports. You have no judgments or collections. Those typically have to resolved before mortgage consideration.
- Call your trusted mortgage professional to discuss mortgage options. (NOTE: If you want contact information for the BEST mortgage professionals with whom I’ve worked, email me. It doesn’t matter if you live and want to buy a home outside of Florida- they can help you. They will not rush you, talk over your head or make you feel like an idiot. They keep me updated on all the craziness in the mortgage markets and takes good care of my real estate customers, so I don’t have to worry about unpleasant surprises popping up at or near closing.)
- It’s the last two years that matter most. The BK should not cause a problem, since it’s 5 years old. Further, you have a down payment (maybe including the land) & reserves for closing costs.
- You need (at least) 3 active tradelines (or open accounts including installment [car, RV, Rooms2Go, etc] & revolving [credit card, gas card, etc]). NOTE: This is where we might have a concern. Heather & Chris have two car payments (both in Heather’s name) & one RV payment (both names). However, they have not used any credit cards. Heather appears to have three lines (that is, three active, open & good credit accounts ~ installment but no revolving) & Chris has one line (active, open & good credit account).
We can address these other credit report items once you talk with Jim, especially the inquiries and the car payoff that shows included in BK.
On one of Heather’s accounts, two bureaus took Heather’s BK papers and marked every single account as “included in bankruptcy.”
She had re-affirmed a car loan and paid it off (paid as agreed). I suggested Heather mail a copy of the letter (i.e. the proof) she has from the car finance company and send it CMRRR (certified letter, return receipt requested) to each of two bureaus reporting inaccurately.
In the letter, I recommend she inform each she has asked them repeatedly to report this account accurately.
Include the sheet of paper from your credit report for bureau #1 that clearly highlights this account and what is inaccurate. The other sheet of paper is the letter from the auto finance company clearly refuting the credit bureau’s inaccurate reporting.
Do this for each of two bureaus, emphasizing to each bureau you’ve requested accurate reporting and that you are filing a complaint with the Federal Trade Commission for failure to report your credit history accurately.
If this simple letter to the bureaus doesn’t work, Heather knows what to do next. Instead of throwing her hands in the air and deferring their dream, she has an exact strategy as outlined in my videos and book.
This is the value of specific help, ready to guide you to whatever it is you want from improved credit.
“My credit check…” doesn’t have to shock you. From my videos and book, “The Busy Person’s Credit Makeover,” Heather & Chris know what they need to do to make their dream of home ownership a reality.
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