Florida Home Buyer Credit Repair

Some of the Home Buyers who apply for Florida mortgages with Capital Lending Corp. have credit reports that prove they're human.

If you have damaged credit, you may need to repair your credit before applying for a mortgage. Investing the time, money, and effort to fix the derogatory information on your credit report is short-term pain for long-term gain.

Repaired credit can mean the difference between approval and denial of your Florida home loan application.

More often, it means thousands of dollars in savings over the life of a typical 30 year mortgage because your repaired credit qualifies you for a Florida Home Loan with far better terms and a much lower interest rate.

Instead of being forced to accept high interest sub prime financing, you may qualify for an FHA alternative mortgage. You will pay less in interest and build equity in your home much faster.

The Credit Repair Process For Florida Loan Applicants

The first step in repairing your credit is to recognize that you can improve your FICO score by 40-60 points or more by following the simple steps in this credit repair guide. Credit repair is not something that you have to pay hundreds of dollars to an agency to do. Many of our Florida Mortgage clients do a fine job repairing their own credit.

The key to loan approval rests upon two things: how well you prepare yourself to apply for a loan and how well your mortgage broker assembles and presents your application to the Lender.

The first is entirely in your hands.

This guide will spell out exactly how to repair your credit yourself. With a sincere credit repair effort - it's not impossible for a Florida borrower to make significant gains in FICO scores in a relatively short time.

The first step in repairing your credit is to find out exactly where you stand with the three major credit bureaus by getting a tri-merged credit report with scores.

As you begin to re-contact the collection agencies that owe your unpaid debts, you should keep this in mind: Your goal is to negotiate a satisfaction of the debt for less than the outstanding amount. The collection agencies purchased your debt at a discount, so they will often accept less than full payment.

Do not ever tell a collection agency that you are intending to buy a home.

They will be far less willing to negotiate the debt if they believe that they have leverage over your loan approval.

Prepare yourself to negotiate by deciding an amount that you can pay to settle the debt and make the collection agency that offer.

The front-line collector may not be able to give you an immediate answer, but you should specify that your offer is good only for a 14-day period.

Be patient and you may be able to settle for a fraction of full debt. Remember to secure written proof of the acceptance of your offer as satisfaction of the debt in full so that you can present this to your Florida Mortgage Broker and to the underwriter of your Florida mortgage.

If you work out a payment plan, be sure that whatever you agree to is in writing so that you can show that you are taking steps to pay your past due obligations. Before you accept any terms for a repayment plan from a collection agency, be sure to run them by your mortgage broker to make sure that the arrangement will improve your chances of getting your Florida mortgage application approved.

The Debts You Must Settle: Tax Liens, Child Support, and Judgments

Settling tax liens, back child support, and judgments is required for almost every kind of Florida mortgage. It's the right place to start and it will raise your FICO score.

If the amounts are large, working out a repayment plan may still be enough for you to get a FHA Loan Alternative because these loans can be manually underwritten and approved based upon your actions and not just your Credit Score. An underwriter has much more flexibility with the FHA alternative mortgage program to say yes when the loan makes sense despite an applicants low credit scores.

Past Due Medical Bills, Credit Card Accounts and Other Installment Debts

As you consider whether to settle these debts before you close on your home, you need to look carefully at when they were last reported to the credit reporting agencies.

If it has been more than 2 years since they were last reported, do not settle these debts without first checking with your Capital Lending Corp. Loan Officer.

Unbelievably, settling them could actually lower your scores in the short run.

As far as credit card charge off accounts and installment debts that have been charged off: Examine your report to make certain that you are dealing with the current owner of the debt. If the debts were reported within the last two years, should contact the current owner of the debt and negotiate the best settlement that you can.

Most conventional loan programs require unpaid medical bills to be paid as a condition of approval; however, underwriters have some latitude depending on the specific reasons for the non-payment.

Be sure to review any proposed payoff or repayment plan with your Florida mortgage broker.

Sending Notice to the Credit Bureaus of Satisfied Debts

For each of the debts that you have negotiated an amount for full payment and paid, send a letter to the reporting credit agencies. Be sure to include written proof that the debt has been satisfied. If the debt is only being reported by two of the three agencies, do not send this letter to the agency that is not reporting. Collection agencies are generally good about reporting payment in full, but you should still send these payoff letters to each of the bureaus that reports the debt.

When a past due or charge off accounts are sold and resold to several collection agencies, the same debt often appears several times on the same bureau. Part of improving your credit scores is to send a letter to the bureaus to have the duplicate listings from prior owners of the debt removed as paid in full.

Remember to send these letters only to the credit reporting agencies that show the duplicate listing. Do not send notice to bureaus that do not report the debt.

Reviewing Your Credit Report For Items That Should Be Disputed

In some cases, the credit bureaus make mistakes and report debts on your reports that are not yours. In other cases, you may have legitimate reason to dispute a debt.

Some of the common ones are medical bills that should have been paid by insurance or a service provider that failed to render the service or deliver the goods that he or she billed for. Be sure to document the reasons and review them with your mortgage broker so that he or she can present them the right way to your underwriter.

A word of caution: No matter where you read it, or how temptingly easy it is to do, never dispute a legitimate debt. Nothing dooms a file more quickly than an underwriter who is convinced that a borrower is seeking to avoid debts that he or she really owes.

How To Clean Up Your Credit Report When A Creditor Has Vanished

Although credit agencies are skilled at skip tracing a borrower who skips town, sometimes it's hard to locate a creditor so that you can settle the debt and get them off your credit report.

Start with the information on the credit report and then use the Internet search engines like Google®, Yahoo!® and MSN to locate them. If unsuccessful, another good source is Superpages.com, or other city, or telephone directories.

Only after you have made a good faith effort to locate them, should you place the obligation in dispute in a letter that details the steps that you took to locate and pay the creditor. For Questions on your credit and the requirements for a Florida mortgage, call Capital Lending Corp. at 1-866-924-4111 or use our secure Quick Inquiry form.