Sound Life Education

By Mike Fish, Founder of Sound Life Education

It is possible for errors to appear on a credit report. If this happens, your credit score and probability of being approved for a mortgage loan could be damaged. So it’s very important that you obtain a copy of your credit report from all three agencies before you apply for your mortgage loan. You can contact them by phone or via the Internet. In six states, you can obtain a copy of your report for free. Elsewhere, you will be charged a fee. Be sure to contact all three agencies because the information contained in each database in not identical.

If you discover an error in your report, contact the creditor directly in writing. Also, report the error directly to the credit agency so that the error can be removed. The agency must investigate and respond within 30 days. If there is an unresolved dispute still outstanding when you apply for your loan, be sure to tell your lender and provide copies of your correspondence with the credit agency.

How to Improve your Credit Profile

1. We start with the most obvious, pay your bills on time, and the payment must be at least the minimum due, not some portion of the minimum due. Your creditor will consider the “less the minimum payment” to be a late payment. Of course, your creditor will be happy to accept a payment that is larger than the minimum due.
2. Don’t max out on your credit cards. Avoid ongoing balances that are at or near the maximum allowed by each card. Too much debt can be unhealthy.
3. Pay more than the minimum payment due on your cards. One example; paying off $500 at 18% at a minimum monthly payment of $15 will take 47 months and cost over $190 in interest. Paying off that same card with $35 dollars per months only takes 17 months and cost only $67 in interest.
4. Limit the number of credit cards you have. Otherwise, its too tempting to take down additional debt and become over loaded.
5. Avoid impulse buying on major purchases. In fact, save up for such purchases to avoid relying on credit altogether.
6. Also, remember that you are responsible for all joint accounts you have opened with another individual and for all loans on which you are a co-signer. If the other party charges items on the joint account and neglects to make payments as agreed, the bad news appears on your credit report as well as on theirs.
7. Review your credit report at least once each year for unexpected changes.
8. By law, most unfavorable credit information must be dropped after 7 years. A bankruptcy will remain on your record for 10 years.

Nontraditional Credit History

What if you do not have any credit cards or other debts that would appear on a credit report? You can still apply for a mortgage loan but you must provide documentation of your nontraditional credit history. Lenders are typically willing to consider written proof that you have paid the following items on time:

1. Rent
2. Utilities
3. Telephone
4. Cable TV

I love investing in real estate because of my income potential, but the most important aspect of all of this is the fact that we are putting families into homes, and then helping them through the buying process for them to become the actual homeowner. Always use the pay-it-forward program in everything that you do, and the money will always come!

See you at the top!