Credit Information EVERYONE Needs to Know

If you are thinking about buying a or re-financing now, or anytime in the future, one of the main factors determining your ability to qualify for a loan is your credit score. Understanding what credit scores mean, how they are calculated, and how to improve your score can make the difference in your ability to qualify for a loan and get the best possible terms and interest rates.

Credit scores range from 300-850. Here is how those scores are broken down:

780 and Above: Outstanding

740-780: Excellent

690-740: Good

620-690: Fair

62o and Below: Poor

Typically, the higher your credit score, the better loan terms you will be offered. People with scores below 620 will generally not be able to qualify for a loan.

Credit scores are determined by a number of factors including:

• Amounts owed
• Payment history
• Types of credit in use
• New Credit
• Length of Credit History

There are three major credit reporting agencies: Equifax, Experian, and TransUnion. These agencies may all have slightly different information, and they each use a different method to calculate credit scores, so your score will be slightly different from each one. Most lenders will pull credit reports from all three agencies when processing a loan. It is important that everyone checks their credit report at least once a year to ensure that the information is accurate and up-to-date. You can pull a free copy of your credit report once a year through the website http://www.annualcreditreport.com/. This website also offers credit scores, for a fee.

If your credit score has seen better days, there are things you can start doing right away to improve your score:

• Pay all your bills on time
• Work to get credit card balances below 25% of their limits
• Open new accounts only if absolutely necessary
• Lengthen your credit history
• Seek credit counseling through the National Foundation for Credit Counseling http://www.nfcc.org/
• Opt-out to stop receiving new credit card offers through http://www.optoutprescreen.com/ or call 1-888-567-8688

In Boulder County, we have a fantastic resource for anyone who is thinking about buying a home and has questions about credit or related items. The Boulder County Housing Counseling Program offers free housing counseling and classes http://www.bouldercounty.org/hhs/housingcounseling.htm. These services are available to residents of Boulder, Broomfield, and western Weld Counties.

Brought to you by:

Jennifer Fly

Broker Associate

Colorado Landmark, Realtors

(303) 443-3377

jenniferfly@coloradolandmark.com

Twitter: jenflycolorado

Understanding Short Sales - A Good Option for Homeowners in Trouble

Most of us in the real estate business (and probably most people in America) didn’t know what the term “short sale” meant 2 years ago. Now it is a topic that appears in our business on a daily basis, and we are all working hard to stay up to date with the latest information to help our clients.


A short sale is an agreement from your lender to accept less than the amount you owe on your mortgage and release the lien on your property so you are able to sell it and move on. The short sale process can take, on average, 4-6 months and requires a lot of patience, but there are steps that can be taken to make the process easier.

If you are a seller and you have fallen behind on your mortgage payments, tell your Realtor right away. As with all real estate transactions, it is important to work with someone who knows and understands the process. Your Colorado Landmark Realtor can give you a checklist of the items that should be completed and submitted to the bank upon listing your home. Once you receive an offer on your property, your Realtor will help you submit it to the lender along with other required documentation to help facilitate the sale as quickly as possible.

By the time they have reached the point of becoming delinquent with their mortgage payments, many sellers are tempted to just walk away from their mortgage and allow the bank to foreclose on their property. There are several reasons why this is a bad idea.

• A foreclosure can negatively impact your credit score by 250 – 300 points, and it will remain on your credit history for up to 10 years.



• A homeowner who has had a foreclosure is ineligible for a Fannie Mae backed mortgage for a period of up to 5 years, and has to disclose a foreclosure in the last 7 years on any loan applications.



• Having a foreclosure on your credit history can make it difficult for you to qualify for any other type of loan, and some employers will even use this information to re-assign or terminate employees.
  

Instead, if you take the time and effort to get your house sold through a short sale, it will most likely impact your credit score by only 50 or so points, and you are able to qualify for a mortgage and purchase another home after only 2 years. Not to mention that you can sell your home and move out of your neighborhood with dignity, and feel as though you did everything you could to protect your family’s future.

If you are a buyer and you are interested in purchasing a property that is being sold as a short sale, you will also need to be patient. It is important to work with a buyers agent who has experience with short sales. New post coming soon: tips for buyers interested in short sale properties!


The short sale process can be stressful and frustrating, but working with an experienced agent will make it much easier for you every step of the way. At Colorado Landmark our real estate sales associates strive to be up to date on the latest real estate trends and market information. Our sales associates regularly pursue continuing education opportunities to reinforce their expertise and knowledge. If you have any questions or are ready to sell your home, please give us a call.




This blog entry written by:


Jennifer Fly, Broker Associate, Colorado Landmark Realtors

303-506-0253 (cell)
jenniferfly@coloradolandmark.com