Month: April 2010

How Does a Short Sale or a Foreclosure Impact Your Credit Score

You are most likely weighing the pros and cons of a short sale vs. a foreclosure. If you, like many other Americans right now, are coping with a challenge to meet your mortgage payment. This may be due to one or a combination of these common struggles: 1) job loss, 2) increasing rates if you are in an ARM loan, and 3) decreasing home values. It is most likely that you are deeply concerned with how either of these ugly terms will affect your credit score and which one may be the better choice of the two burdens. Instead of being intimidated, you are at least getting educated on your choices and the consequences. Though the reality of a short sale or foreclosure is not positive, researching what you will face is a good start to finding the best solution to your individual situation.

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The “Follow Me Down” Phenomenon And Your Credit Score

It seems like a logical step. You say to yourself, “I want to fix my credit, so I will pay off some of my credit card debt.” You take your savings and apply it to your balance. You sit back and wait for your credit score to go up. It’s guaranteed, right? Not always.

According to ABC News with the collapse of the economy, credit has been more difficult to come by, and banks are feeling the pressure of the easy credit they once handed out freely to their customers. Well, it has now become the customers who are feeling the pressure. Many people have experienced what is called the “follow me down” phenomenon while attempting to fix their credit. When a customer pays down his balance, “follow me down” reacts by decreasing their card’s spending limit. While paying down debt should help this customer’s credit score, the result of the phenomenon is a credit score decrease due to the cut in the credit card’s spending limit. Providers like Chase and Citibank have been cited by consumers in recent months for taking part in this practice.

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How Lenders View Your Credit Score for Mortgage Approval

Credit Score Guidelines in the ever changing housing market, if you want a mortgage, it can help for you to know your credit score.

So you are ready to take that challenging step to refinance your current mortgage or purchase your dream home; but do you know what your credit score is and how it will stand up to Lender’s current guidelines? With the obvious strain on the housing market today, Lender and Investors are really cracking down on the level of credit risk they are willing to accept. When you seek out a mortgage, each Lender that you go to will pull your credit report, and you are entitled to receive a copy of this so that you can see where your score ranks and how it will hold up in their approval process.

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Common Credit Repair Mistakes

Many people feel hesitant after declaring, “I want to fix my credit.” It’s easy to wish for a better credit score, but common mistakes on the path to fixing credit can actually lead to a more lengthy process. Read on to discover some common scenarios.

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Avoiding Credit Repair Scams

Credit repair scams are everywhere, from TV commercials to Internet ads. With so many out there, it is difficult to discern which credit repair companies are legitimate and which participate in fraudulent schemes. Before you hire someone to help repair your credit, consider the following six signs of credit repair scams:

1. The company asks for up-front payment.

This tactic is perhaps the most common credit repair scam, and it is also illegal. Under the Credit Repair Organizations Act (CROA), credit repair companies cannot accept payment before performing the work they’ve agreed to complete.

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