Buying a home, or refinancing your current VA mortgage to take advantage of low va rates is possible if you have good credit, but for many Vets and otherwise eligible VA loan candidates low credit scores and credit problems will get in the way.

If you are looking to use a VA loan to purchase a home or to refinance your current mortgage and you are not sure what your credit looks like you should get in touch with a VA lender as soon as you can. As you apply for a VA mortgage, the lender will get your credit report and let know you if you have any credit issues to be concerned about. They may even give you a copy of your credit report – all you have to do is ask them. Some lenders will give it to you and some won’t.

No matter whether your scores are good now, or they are low and you need to get them up in order to qualify for a mortgage here are some suggestions to follow for raising and maintaining your scores.

• Pay any car loans, student loans, credit cards, mortgages, other bank loans, and in some cases even utility bills first and on time. These types of accounts report to the credit bureaus and they have little leniency when it comes to someone being 30 days past their due date.
• When it comes to your rent payment – make sure you are not more than 30 days late. Chances are when you apply for your mortgage one of the credit accounts you’ll have to provide documentation for will be your housing history. Late payments to your landlord could be a deal breaker, especially if it has been within the past 12 months. Other items such as your cell phone bill, insurance, etc. are not as critical as they typically don’t report to the credit bureause for late payments unless you let your account go into collections.
• On your credit card accounts you want to make sure that your balance stays at least under 50% of your account limit and it is best to keep your balance under 30% of the limit. This balance to limit ratio is very important to your credit scores. A quick way to improve your scores is to make a payment to one of your accounts that is over 30-50% of the limit to reduce the balance.
• Make sure that you get a copy of your credit report. You want to go through it very carefully looking for errors and charges/activity that you didn’t do. Many instances of identity theft are found by just looking for unauthorized activity on a credit report. You never know what has happened to your credit if you haven’t checked it in awhile. If you find errors and mistakes you’ll want to go through the process of fixing them. This usually takes some letters back and forth with the credit bureaus – always keep in mind that the burden of proof is on you to show the correct information. The FTC.gov has a lot of good information about fixing credit report errors.
• Now this might sound odd, but if you have any unpaid collection accounts – don’t pay them! That’s right, don’t pay them. If you do, you could actually cause your credit score to go down even more (at least in the short term) which could hurt your qualification for a mortgage. Get some advice from your loan officer about how to handle these accounts. Often, you can just pay them at your loan closing, or in some cases you won’t have to worry about them at all.
• In the case where you have had a Chapter 7 Bankruptcy, you will want to monitor your credit report to make sure all of your discharged creditors update their records on your credit report. You will have time to get any of these changes made as you will have to two years from your bankruptcy discharge date to get a VA loan.
• If you have a short sale you will have a two year wait and if you have a foreclosure you’ll have to wait at least 3 years to get a new VA loan.

With a foreclosure, short sale, or bankruptcy you will also need time for your credit scores to recover.

 In the beginning, the consumer used the card judiciously and paid off the balance in full monthly. However over time, the consumer started paying only the monthly minimum payment. From time to time because the economic climate was on the upswing, the consumer had equity in their homes. Because of the equity, the consumer would refinance their homes at a lower rate and take monies out to pay off their unsecured debt.  This way of handling finances was alright as long as the economic was in a positive position.

Due to today’s economy – consumers are facing financial hardships, lost of job, reduced salaries, and divorce or faced a medical emergency along with the adjusted interest rate on their mortgages and increased unsecured credit card debt. 

The consumers are faced with the reality of how to get out of debt. In most cases, this is the first time many consumers were faced with these uncertain financial times.  So the consumer start looking for ways to pay off their financial obligations.

One of the options the consumer is selecting is a debt settlement program.  Debt settlement is a method by which a third party negotiates with the lenders to reduce your obligation by up to 50% of the outstanding debt.  The consumer puts aside a set amount of monies each month into a “trust/escrow” account over a period of 12 to 48 months depending upon the amount of their credit card debt.  The debt settlement company starts to negotiate when at least half of the lowest balance is in the account.  This proceed is repeated until all debts are settled.

This is not an easy fix.  However, the amount of monies placed into the trust/escrow” account is normally less than the combined monthly minimum payments. By entering into this program, it will show the lender you want to repay your obligations but need help because of the consumer’s most recent financial hardship. The majority of lenders are willing to accept a settlement of half because if the consumer files bankruptcy the odds are the lenders will receive nothing.  By receiving nothing this affects the lenders bottom line and is reflects as loan losses on their financial statements. So call your debt settlement expert today to discuss

You receive an offer in the mail for a credit card.  You send in back and within weeks you have a credit card at your disposal.  It becomes the perfect recipe for a financial disaster.  It seems as though many people are living beyond their means.  While convenience is wonderful with regards to your credit card it also comes with a price.

Even fast food retailers know that consumers will be more likely to spend more on plastic than with cash.  Needless to say, they are racing to make it easy that every outlet is now card friendly.  The last thing you would want to do is purchase that hamburger on a credit card.  Especially, if you’re buying it on credit, paying it off slowly or worse, finding out that your credit card company has increased its interest rates.

You need to read those little booklets that often come in the mail.  Do not discard the material – if you have questions call your credit card company.

Finally, if you find yourself in doubt – pay the minimum payment on time.  Big payments do not impress lenders: timely payments do.  For example – if you make a late payment your lender may waive the late fee however your other credit card company’s can raise the interest rate even if you made no late payments to them.  How can they do this?  It’s called “universal default”.  The basics of universal default are simple – if you’re more than 30 days late on a payment to anyone the interest rate on any card with a universal default clause can increase your interest rate.

With that being said – don’t take anything for granted.  read the small print and if you have any questions – give your card carrier a call.  Be proactive not reactive to the situation at hand.

Understanding the history of credit and how you got into this unhealthy financial position  is key if you plan to use a debt settlement program. One of the keys to having a peaceful and happy life is your financial well being.  However, in today’s world that is not easy.

When your grandparents  wanted to purchase a home for example  they would save until they had almost half of the purchase price for  the home. If you take a step back in time to the 1940′s or 1950′s and talk to your grandparents , they will tell you that cash was the most important item for a family.   Yes, the cost of a home in the 1940′s and 1950′s was much less than today’s world.  In fact , it was not until December 1947, that the banking system issued its first prime rate figure. Prime rate is the interest rate charged by banks to their most creditworthy customers. The first prime rate was established at 1.75%. Prime rate is the base rate that bank use and then normally add to that number when lending money to customers.

In addition most people would save cash for their purchases. The credit card was not in our vocabulary. In  1950, the first nationwide credit card company was started by The Diner’s Club. The concept was that this was credit and the balance would be paid in full at the end of each month.  In 1966, the general purpose credit card was issued by Bank of America. This became the for runner of the nationwide general purpose credit card industry.  This card was used in place of cash and if we were short each month of paying off the balance that was alright with the credit card companies.  So that how the cycle of personal unsecured borrowing started and got us into this financial situation.

Did you know the following facts:

·         Average credit card debt is more than $8,000

·         35 million pay only the minimum payment each month

·         Average American Family has 8 credit cards.

·         Of the 144 million general purpose credit cards only 55 million pay off their bill each month.

You can get out of debt by starting to save with a debt settlement company.  Now is the time to cut up the credit credits and balance our personal financial situation.

Is a credit card company allowed to lower your credit limit?  A credit card company is allowed to lower your credit limit without warning if they see fit.  The credit crisis has many credit card companies in a real bind.  Many credit card companies just can’t pay their credit card bills and are defaulting on their credit cards.  The credit card companies want to beat you to the punch and don’t want to extend themselves any further than is necessary.

My Credit Limit Has Been Lowered, Why? Continue Reading »

How do I get rid of credit card debt fast?  Being in credit card debt can be a frustrating and scary experience.  The over the limit fees and the late fees can get burdensome if not pushing you over the financial edge.  If you have your back against the wall you do have a few options.

What Is The Quickest Way To Get Out Of Debt? Continue Reading »

Americans have a bad habit with credit cards.  The average american has over $9000 in credit card debt.  This according to an article by Liz Pulliam Weston.  This is a troubling figure in light of our current credit crunch.  As people start earning less money or just plain just loose their jobs, credit card debt becomes more of a concern.  For some it will begin the beginning of the end financially.  Once you start getting behind on credit card debt it is very hard to get caught up again.

The Vicious Circle Of Credit Card Debt Continue Reading »

If you are behind on your bills and are being hounded by your creditors, the experience can be unsettling.  Many people are curious as to how long it takes for their past due accounts to be turned over to a third party collections company or collection agency.

It Can Take 90-120 Day For Your Account To Go Into Collections Continue Reading »

If you have a dispute over a creditor charge and you are not getting anywhere over the phone, you may need to send the creditor a dispute letter in writing. You have the right to dispute a charge in the Fair Debt Collection Act. Be sure to keep a record of all correspondence. You want to keep a paper trail of when you sent in your documentation just in case they want to give you a hard time about it.

Try To Resolve A Dispute Over The Phone First Before Legal Action Continue Reading »

How to use your credit cards responsibly. What you do not know about your credit cards will hurt you.

1. If you use your credit cards overseas, do not be surprised by and extra fee added to each transaction that you make. If you can use your ATM card to access your bank account. Continue Reading »

Your credit card company is not your friend. They have one goal in mind and that is to make money off of you. You will probably not find any sympathy from them if you are unable to make your credit card bill.

How will my credit card try and trick me? Continue Reading »

The ugly truth about credit card balance transfers

Your mailbox is probably being pounded of credit card offers with low introductory interest rates. I see a 0% credit card offer at least once a week. Many of these rates are just teaser rates and they can jump to over 29%. Continue Reading »

What will happen if I stop paying my bills? It is important to know what will happen if you are unable to pay your monthly debt obligations. The first 30 day late that you have your credit score is going to drop like a rock. I have seen credit scores drop as much as 100 points just for one 30 day late. Your interest rates will probably go up as well. You credit card contract has a provision call the universal default rate. This is the rate they can charge you when you do not make a payment. Continue Reading »

What debt guru has a better method for getting out of debt?  If you were to match Suze Orman up against Dave Ramsey and their debt free plans, who would win?

How does Suze Orman tell you to get out of debt? Continue Reading »

Will a credit card company really negotiate with me? If you are current on your credit card bills and have a good payment history it is unlikely that a credit card company will negotiate the amount of principal that you will have to pay back. Think about it, if you are current and have been paying on time, why would they want to take less from you. The credit card business is a cash flow business anyway. They will only start to care about their repayment if you stop paying on your balances.

You can only negotiate with a creditor once your are behind or are in collections

A creditor will be more interested in settling with you once your are behind or are in collections. Keep in mind that if you file bankruptcy the creditor will not get any more money out of you. It would be in their best interest to take something rather than them get nothing.

Bankruptcy Questions

If you do not get anywhere with your debt negotiations you may actually want to consider bankruptcy. If the creditor knows that you are serious they may just take your offer. I would start out low and see what you can get. If you do not like dealing with creditors and collection agencies you could always hire and attorney or debt settlement firm.

This information is of general interest and is not legal advice. If you need legal advice seek the services or a professional or attorney

What happens to my fico score if I am reported late? If you are late paying on your credit card bill by thirty days or more, it will get reported to the credit bureau as a late. I have seen credit scores drop as much as 100 points just by having one late payment. If you are trying to buy a home and the credit late is within a 12 month period it may keep you from being able to buy or refinance your home.

Does having to pay the late fee automatically mean that I will be reported as late to the credit bureau? Continue Reading »

What happens to my fico score if I cancel my credit card? canceling a credit card does not eliminate your responsibility to repay the debt. What it can potentially do is to lower your credit score. A percentage of your credit score is determined by your credit history. When you cancel a credit card, your credit history goes with it. Canceling a bunch of credit cards and moving the debt to another credit card will hurt your credit score in most cases. Continue Reading »

How do bill collectors operate? Debt Collection companies work on behalf of a creditor who wishes to collect on a delinquent debt. Typically the original creditor does not have the time or resources to go after delinquent credit accounts. Collection Agencies are specialists in the world of debt collection. They have the people and resources that specialize in collecting debt. Continue Reading »

How do you use a credit card? The credit card industry has changed the way we buy consumables. You see Visa, Master Card, Discover and American Express logos everywhere now. You can even buy your hamburgers at McDonalds with a credit card. It is now convenient to make purchases even if you don’t have the money. Anyone who survived the depression would probably cringe. Back then if you didn’t have the money you didn’t buy it. Bank loans were tough to come by. So if you couldn’t afford something you just made do. Now you can go buy something an hope to figure out how to pay for it later. This type of thinking has made us a nation of debtors. At no point in our history have we seen such an abundance of debt and financial issues facing people. Bankruptcies in our country are at an all time high with no relief in sight. Continue Reading »

The universal default rate is the highest interest rate a credit card company can charge you if you are late or default on your credit card. If you read the fine print it is in the contract that you sign with your credit card company. Some credit card companies can charge you as much as 30% interest once you miss a payment. Make sure that you have a plan to pay your credit cards on time every month. A missed credit card payment can be a costly exercise.

Remember to use your credit wisely. Being in debt is no fun and it is not a great way to live. Live by your needs and not your wants and you will always be happy.

How do you do a fraud alert?  If you think you have been the victim of identity theft, you can inform the credit bureaus.  There is no penalty on your credit if you do so.  In fact you can do a fraud alert even if you have not been a victim of identity theft.  This would be another layer of security.  Once you have a fraud alert on your credit, you must personally authorize any new credit. Continue Reading »