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Negative Credit Issues
Your credit issues have to be resolved prior to starting your search for a home with a Realtor. Therefore, you should print your Free Credit Report by using the following site: www.AnnualCreditReport.com
Negative Issues - Once you print your report, you'll are going to want to review any negative issues identified within the report. These are the issues that will cause you not to get a mortgage approved for the purchase of a home.
You have four options when dealing with negative issues on your report:
- Pay On Time - If you are addressing a late payment, you merely have to begin to pay the account on time for at least 6 months before reapplying for a mortgage.
- Payment Plan - If it is a collection and/or judgment you could develop a payment plan with the creditor or collection agency for 6 months before reapplying for a mortgage.
- Settlement - The other option with collections and/or judgments is to settle for a portion of the debt. Usually this is negotiable with the collection agency. You should attempt to pay 30% if it is a collection that is more then 2 years old. If it is less then 2 years, you should not pay more then 50% of the total amount owed on the debt. But again this is all negotiable.
- Dispute - if the information is inaccurate, you have the right to dispute the information. The credit agency has 30 days to review the dispute. If the information you are disputing is not confirmed by the third party company to be accurate then the information has to be removed by the credit agency.
Documentation - Anything you do to address these types of credit issues must be carefully documented. The mortgage company is going to want to see evidence of your action. And a letter of explanation - a simple paragraph of 3 to 5 sentences will be sufficient - will need to accompany the evidence of the payment plans, settlement and/or on-time-payment history.
Credit Counseling Agencies - These are agencies that for a FEE assist you with the development of payment plans, negotiate settlements, and dispute inadequate credit issues. You should only use a credit counseling agency recommended by a family, friend and/or co-worker that has successfully used the service of the credit counseling agency.
Gautier Realtors recommend the following credit counseling agency -
Consumer Credit Counseling Service of Delaware Valley
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