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.

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

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.

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.

My Credit Limit Has Been Lowered, Why?

You credit card company wants to protect themselves from further loses, so don’t be surprised if you see that you available credit has been decreased or the card has been canceled.  The credit card companies are worried about consumers defaulting on their credit card bills.  With millions of Americans losing their jobs, people are going to be turning to their credit cards to get them through.  The credit card companies do not want to be a bridge for you.  They are going to be analyzing your purchases to search for irregular behavior.  Cash advances and spikes in purchases may cause your credit card to be closed.

Do Not Expect Your Credit Card To Be Their For You

A back up plan for emergency cash should not include your credit cards anymore.  Start now to save for a rainy day.  Set a side a percentage of what you are making now into a liquid savings account.  You may even want to consider putter your money into a secured credit card.  Then it will be like using cash and you will spend less.

What Is The Quickest Way To Get Out Of Debt?

The two fastest ways to get out of debt are either bankruptcy or debt settlement.  A chapter 13 or chapter 7 will take the financial burden off of you the fastest.  A chapter 7 bankruptcy is a total liquidation of the debt while a chapter 13 is a debt workout program.  You will have to make payments over time to your creditors.  Once you have completed your bankruptcy program you will be discharged from the bankruptcy.  The bankrutpcy will appear on your credit however for 7-10 years.  You will be excluded from buying a home for at least two years from the discharge date with a bankrutpcy on your credit report.

Debt Negotiation Is A Fast Way To Get Rid Of Credit Card Debt

If Bankruptcy is not for you, credit card debt settlement may be the best option for you to handle your credit card debt.  Debt settlement and debt negotiation are a way to work with your creditors to negotiate on the original principal balance.  Debt settlement has no long term negative effects on your credit report like a bankruptcy does.  In fact it is possible under Fannie Mae home loan guidelines to buy a home.  In fact some people in debt negtiation programs are able to buy home even before their debt program is complete.  Fannie Mae loan guidelines allow for up to $5000 in open collection accounts without loosing eligibility to buy a home.

The Vicious Circle Of Credit Card Debt

Once you are late on a credit card, your interest rates will go up.  In some cases a credit card company will raise your rates over 30%.  They will keep tacking it on to your balance.  You will even probably start getting over the limit fees as well.

Where To Get Help For Credit Card Debt

If you are having trouble paying your credit cards, you do have options.  You could seek the services of a credit counseling company.  A CCCS company can consolidate your bills into one payment.  A debt consolidation company can also lower your rates and get rid of late and over the limit fees as well.  If you are unable to make the payments for a credit consolidation company, you may want to consider doing a debt negotiation program.  A debt settlement program can cut your debt in half and have you out of debt in three years or less.  Your last resort should be to file a bankruptcy.  A bankruptcy can stay on your credit for up to 7 years as well as affect your credit purchases for this amount of time.

Any Debt Is Too Much Debt

Just because you fall into the average range, don’t think everything is ok with your debt load.  Having any debt robs you of the ability to save for the future.  The compounding effect of interest is very powerful.  Saving small amounts of money for a long period of time add up.  So don’t fool yourself.  Live within your means and pay off your debt as soon as you can so you can start saving.

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

The original issuer of your credit card will probably try to collect from you for the first three to four months.  After that they will probably send you to a collection agency.  The collection agency is usually very aggressive and will pursue you very hard for payment.

You best bet is to do whatever you need to do to stay current on your bills.  Being in debt is no fun and worrying about it will rob you of the full experience of your life.

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

You should only send in a written dispute as a last resort. See if you can resolve the matter over the phone first with the creditor. If you do not get anywhere then you should send the creditor a written dispute over the charge.

Date: ______________________

__________________________________________________

__________________________________________________

__________________________________________________

To: ________________________

I am writing to dispute the following bill that you are attempting to collect from me.

Name(s) on account: ___________________________

Account #: ______________________________

Creditor name: _____________________________________

Amount of dispute: _____________________________

I am disputing this bill for the following circumstance(s):

_____________________________________________________________________________

_____________________________________________________________________________

Please return this bill to the creditor immediately and remove any “sent to collection agency” notations that may be in my credit profile.

Thank you for your prompt attention to this matter.

Sincerely,

________________________________________

Signature

Name: ____________________

Address: ____________________

____________________

Home phone#: ____________________

cc: Credit grantor, _____________________________

This information is of general interest only. Should you require legal advice seek the services of a professional or an attorney.

]]> http://debtnegotiationzone.com/sample-letter-to-dispute-a-charge-with-a-creditor/feed/ 0 http://debtnegotiationzone.com/how-to-use-credit-cards-wisely/ http://debtnegotiationzone.com/how-to-use-credit-cards-wisely/#comments Fri, 15 Aug 2008 00:09:43 +0000 admin http://debtnegotiationzone.com/?p=175 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.

2. Always pay your entire balance every month. Do this even if you have to take out a personal loan.

3. Make sure you check your statement every month for changes in your interest rate and conditions of the contract.

4. Getting a credit card through a credit union is probably your best bet. A credit union credit card is less likely to hit you with junk fees and changes to your plan.

Your best bet in using a credit card is to pay your balance off in full each month. Do not buy what you cannot afford. It is not worth having stress in your life trying to figure out how to pay for stuff. When you have debt, you give up peace of mind. I would rather have peace in my life than a bunch of junk in my closet.