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| Cleaning up Your Credit Mortgage lenders generally check with three credit bureaus in order to evaluate your past payment history. Your goal in cleaning up your credit report should be to clean up each of the three bureaus. If you only work on one, this does not effect the reporting to the other bureaus. Get A Copy of Your Credit Report The first step is to get a copy of your merged credit report, which shows all three of the major bureaus, Experian (formerly TRW), Equifax (formerly CBI), and Trans-Union. Most mortgage lenders will obtain data from all three of these bureaus in analyzing your credit history. The exception is that some portfolio lenders (usually adjustable rate lenders) may only review one. To make it easier for you, iCredit allows you to order a  Merged Report on-line. Just click on the preceding link. It costs about $29 and is delivered to you by mail in a couple of days. What to Say When You Call Your Creditors There are two efforts that must be made. First, call any creditors reporting a negative and ask them to remove the negative item. Ask in a nice calm voice and do not get upset when they say no. Simply repeat your request over and over in your nice pleasant voice. If you get nowhere, then ask to speak to the supervisor. Make sure you keep a log of your conversation, noting the date, time, who you spoke to and what they said. Repeat this procedure over and over. In a high percentage of cases, it works. Get Written Confirmation of Agreements Be sure to ask for a letter by mail or fax that shows the creditor is correcting the negative information. You may need this letter for two reasons. First, they may not actually make the changes. With the letter, you can appeal directly to the credit bureau and they will make the correction. Second, if you are applying for a mortgage before the changes actually hit the credit bureau’s report, your lender will need this documentation. If you have a charge off or collection account that shows as unpaid, don’t just send them a check and pay it off. Call the creditor on the phone, explain that you have the funds to pay the account in full, and calmly explain why it should not have been reported on your credit in the first place. Then ask if they will provide you a letter deleting the account entirely from all credit bureaus if you pay off the account. Try to get them to fax it to you. As before, be sure to document all of your telephone contact and always keep a nice pleasant tone in your voice. In a large percentage of cases, this also works. Disputing the Report -- When Your Creditor Will Not Remove an Item There will be cases when the creditor does not agree to remove the negative credit item. If it is an item that is definitely not yours, call the credit bureau immediately (except for Equifax, who only responds by mail). When on the telephone, do not discuss any negative items that are accurate. Do not discuss any items that may be accurate in general but have some small error in detail that you can dispute by mail. Once you confirm any accuracy at all, you cannot dispute it later by mail. For the remaining items, you need to dispute them by mail, writing directly to the credit bureaus. Write a letter to the appropriate bureau including your name, social security number, address, disputed accounts, and account numbers. You must sign the letter. Inform the bureau that you are disputing the data as it appears on your credit report |
Mistakes on Your Credit Report Almost every item on your credit report will have some mistake, even if only slight. Do not acknowledge any of the accuracies, but be sure to note all inaccuracies. Write next to each item something like, "not mine, not accurate, mistaken item, complete error," or whatever is most appropriate. Request a copy of the corrected report within thirty days. If they do not respond within 30 days, send another letter. In this letter you will include a copy of your dated original letter and a new letter firmly requesting they remove the disputed information. Include a cc: to the Federal Trade Commission. Do Not Call the Credit Bureaus - Write Letters The credit bureau may write a letter asking you to call. Do not call under any circumstances. Your phone call will be recorded and a log will be made of the conversation. Simply write back with copies of your original letters, telling them of the original date you submitted your request. Keep a file of all correspondence to and from the credit bureau and follow through continually. Do not get discouraged, as this will be worth your while. What happens is that the credit bureaus forward your dispute to the individual creditors. who have forty-five days to respond. If they do not respond within the allotted time the item must be removed. However, if they do respond at a later date with information that documents the credit report is correct, the item will be placed back on your credit report. Bankruptcies For those of you who have filed bankruptcy in the past, the items that were discharged will normally show up as a charge-off or uncollected debt. You will want to write to the credit bureaus, providing a copy of your complete bankruptcy papers and request that they show the debt as "discharged in bankruptcy." This looks better and raises your FICO score. FICO sores above 680 make it easier to obtain mortgage loans. Conclusion You may not be able to clean up every item on your credit report using these methods, but you will certainly be able to improve the way it looks to potential creditors. |
| FICO Scores and Mortgage Underwriting Decisions FICO Scores as Guidelines FICO scores are only "guidelines" and factors other than FICO scores affect underwriting decisions. Some examples of compensating factors that will make an underwriter more lenient toward lower FICO scores can be a larger down payment, low debt-to-income ratios, an excellent history of saving money, and others. There also may be a reasonable explanation for items on the credit history which negatively impact your credit score. They Don't Always Make Sense Even so, sometimes credit scores do not seem to make any sense at all. One borrower with a completely flawless credit history had a FICO score below 600. One borrower with a foreclosure on her credit report had a FICO above 780. Portfolio & Sub-Prime Lenders Finally, there are a few "portfolio" lenders who do not even look at credit scoring, at least on their portfolio loans. A portfolio lender is usually a savings & loan institution who originates some adjustable rate mortgages that they intend to keep in their own portfolio instead of selling them in the secondary mortgage market. They may look at home loans differently. Some concentrate on the value of the home. Some may concentrate more on the savings history of the borrower. There are also "sub-prime" lenders, or "B & C paper" lenders, who will provide a home loan, but at a higher interest rate and cost. Running Credit Reports One thing to remember when you are shopping for a home loan is that you should not let numerous mortgage lenders run credit reports on you. Wait until you have a reasonable expectation that they are the lender you are going to use to obtain your home loan. Not only will you have to explain any credit inquiries in the last ninety days, but numerous inquiries will lower your FICO score by a small amount. This may not matter if your FICO is 780, but it would matter to you if it is 642. Credit bureaus do make allowances if the credit inquiries are grouped in the same time frame from the same type of institutions. Credit History is Important Nowadays, credit scores are important if you want to get the best interest rate available. Protect your FICO score. Do not open new revolving accounts needlessly. Do not fill out credit applications needlessly. Do not keep your credit cards nearly maxed out. Make sure you do use your credit occasionally. Always make sure every creditor has their payment in their office no later than 29 days past due. And never ever be more than thirty days late on your mortgage. Ever. | |
Sample Credit Report Dispute Letter
If you have reviewed your credit report and believe that some of the information it contains may be inaccurate, you can legally dispute it via mail or, for faster results, the Internet. Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can’t be confirmed, then the item(s) should be removed.
For items that cannot be resolved online or that require copies of official paperwork or other supporting documents, use the sample Credit Report Dispute Letter below as a guide. Be sure to mail your letter and documents via Certified Mail for your records.
If you need any help, don’t hesitate to give us a call. We’ll be glad to assist you or to provide a referral to credit repair professionals you can trust.
Your Name
Your Address
Your City, State Zip Code
Date
Name of Credit Reporting Agency
Dispute Department
Address
City, State Zip Code
Re: (Social Security Number & Date of Birth)
Dear Sir or Madam:
I am writing to dispute the following information in my file: (Identify disputed items by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) The items I am disputing have also been circled on the attached copy of the credit report I received.
This item is (inaccurate or incomplete) because (explain what is inaccurate or incomplete and why). I am requesting that the item be (deleted, changed, updated, etc.) to correct the information.
(If you are enclosing any documents, send copies only.)
Enclosed are copies of the following documents supporting my position: (List what you are enclosing, if applicable). I have also enclosed proof of my social security number and current address for your review. Please investigate and (delete or correct) the disputed item(s) as soon as possible, and inform me in writing of the outcome.
Thank you for your time and consideration,
Your name
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