Home Loans
Bad Credit and Debt Consolidation for 100% Financing
(presented by www.refinance-refinance.net - mortgage lenders)
By Dan Tanner
Often times bad credit results from not having bad credit, but by actually having too much credit, which itself lowers credit scores to a point where a purchase or refinance loan is impossible to piece together. We come across several cases, where a person has been paying everything in a timely manner, yet he can’t qualify for a mortgage at all. If this situation is left alone, it can be a very frustrating and a highly disappointing type of experience for both the borrower and the lender. If your credit scores are too low, you cannot qualify for a particular loan program that requires a certain minimum FICO scores.
For example a 100% financing request requires a minimum of 580 middle Fico score and if the scores are less than 580 and lets say just around 570 you don’t qualify for the loans. A 100% financing loan also requires that you have some established credit with at least 2 open trade lines on your credit profile or some past credit history. Credit scores by themselves are not enough to qualify. If all the debt is being paid in a timely manner, than we have to look at the root cause of the problem and it’s usually in the number of accounts balances and the credit limits. If most of the credit accounts are fully used and are at or near their credit limits than it lowers the credit scores significantly and makes it harder to qualify for the minimum 580 fico threshold that is so essential for a loan closing.
The solution to this dilemma is to look and find items on the credit report that have lower balances and pay them off if the borrower have funds and hold off on the purchase or refinance till than. If the borrower is already committed to a purchase contract than we try to extend the purchase contract and try to bring up the credit scores by paying off those balances that are effecting the scores considerably. Often times it’s much harder than said, and it takes time and work and lot of commitment on the part of a loan officer.
We work with a number!
of cred
it bureaus that specialize in rapidly changing a credit profile for a borrower. It’s called a rapid re-scoring program and is a highly effective tool that cures most of the ills and qualifies a sure fire hopeless borrower into a homeowner in a short time. The other alternative is to write to these credit bureaus and hope they will change the information for you, but that is never practical or useful in our experience. Often times it’s a hit or miss game with improper results. The borrower doesn’t have the time and resources and energy to fight a battle with credit grantors and keep up with the publishing cycles. Sometimes it can happen quickly and the loan may through, but it usually takes 60 to 90 days to update a credit report on a normal time scale.
Rapid re-scoring is a perfectly legitimate way of improving your credit and debt situation in the mortgage industry. Its not credit repair as you may seem to think, it is about reporting of actual facts in a rapid manner through the credit bureaus and it
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