Potential Buyers Need Help With Their Credit Fitness

Happy New Year Again!

How many resolutions have you made for 2011?

I was at the gym yesterday which is typical for me.

Yes, I'm a regular "gym rat".

I get frustrated with interruptions or if for some reason I am unable to accomplish my daily workout. Each year at this time it is oddly noticeable that even in what are typically "off hours", the gym is loaded with people. It's new people -- people who received a gym membership for Christmas. Their resolution is to "get fit". Their intentions are inspiring. Often, by March or April, it is noticeable the gym is no longer as crowded as it was in January or February. Half of these new folks get acclimated to a gym routine. Kudos to them! And, their schedules have adjusted to the return so they aren't all coming at same time. The other half loses site of the goal. Inspiration dwindles as they fall back to "old ways" or they give up all together. Only to make another resolution next year that will probably be broken yet again.

Just as we must keep our minds and bodies physically fit, we must also keep our credit worthiness physically fit.

Yesterday, I received a call from a first time home buyer. Rita (not her real name) was inquiring about a home in Marietta, GA. I learned Rita and her husband were newly-wed and after a honey-moon in the Bahama's were back in Georgia and ready to start house-hunting. She was sure a home she had just found on-line was perfect for their first home.

When I asked if they were pre-approved for a mortgage yet, Rita avoided the question. She only wanted to talk about the house. Afterall it was the perfect house for starting their life together as a married couple. People get giddy with excitement about picking out counter tops, door knobs and light fixtures. I'll be the first to admit that talking about how you are going to pay for the house is not exactly the "sexy" part of becoming homeowners. I'll save the details of my discussion and consultation with Rita, however, suffice it too say, before you can visit property in 2011 you must be pre-approved and pre-qualified for a mortgage. Again, I realize that "credit fitness" is NOT what people perceive as the "sexy part" of purchasing property, it is imperative to your ability to purchase a home.

Due to current economic conditions, banks are not in a lending mood. You must PROVE to a bank or mortgage institution that you are "worthy" of accepting the responsibility of receiving a mortgage loan. I read somewhere recently that only 1 in every 60 people actually qualifies for a mortgage loan!

Many home buyers now and for many years to come will face tight lending standards. These folks will be required to improve their credit score before they can be prequalified and pre approved for a mortgage. As a consumer, be aware of the following steps you should be taking now to ensure a speedy credit repair to gain lender approval and the best possible rates, when the time is finally right for you to make a move.

Credit Card Wisdom
-Paying revolving credit cards down is generally more beneficial than, for example, paying down student loans, mortgage or auto loans.
-Always leave a 30% or higher gap between what you owe on the card and the card’s limit. Lenders look for this minimum gap.
-Use cards with care even if you pay off balances each month because depending upon statement dates, the lender may see big balances.
-Pay down the cards closest to their limits first for speedier credit repair. The lending bank will then see the “gap” it wants to see.
-Do not ask a creditor to lower credit limits. Generally, carrying smaller balances on several cards is better than one large balance on one card.
-Check your credit card limits to make sure the report is correct. Limits may not be reported on all cards.
-Never make a late payment on credit cards or any loan.

Protesting Items
-Protest any unjust negatives, such as late payments, collections that are not yours, and any items not reported as “paid as agreed,” if you paid on time and in full.
-Protest items listed as unpaid that were included in a bankruptcy, and items older than seven years (10 for bankruptcy).
-Focus first on the larger, newer negatives listed on the report.

It is important not to worry about smaller items like incorrect address information or an old employer listed as current. This is, of course, unless there is the possibility of identity theft or the file is mixed with someone else’s.

This is certainly not an all-inclusive list of the steps that can be taken to improve a credit score, but it is a great start for home buyers who need to focus on their scores before attempting to get preapproved and ultimately purchase a home.

Sara Hibbard is a licensed Realtor in the state of Georgia. Sara will be happy to help you contact a Lender who specializes in your area of need. Call Sara Hibbard anytime at 770-399-8108. Visit her websites located at www.SaraHibbard.com, www.SaraHibbardRealEstate.com or SaraHibbardHomes.com to research the Atlanta metro area real estate market and mortgage information. Sara Hibbard looks forward to assisting you too when the time is right for you.