Recovering from damaged credit – Part 2

 Credit Scoring  Comments Off on Recovering from damaged credit – Part 2
Apr 162015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Yesterday, we discussed the need to reestablish lines of credit after financial hardship. You may have a tough time getting a major bank credit card with damaged credit, but there are other options.

If you have some savings, consider a secured credit card. This is a major credit card, like Visa or MasterCard, with the credit limit typically limited to the amount of your savings. That’s fine because the credit limit isn’t terribly important. What is important is that you use the card at least occasionally and keep the balance paid on time.

If you’re planning an appliance or furniture purchase, ask if the store has a credit program. Typically, these loans allow you to pay off the purchase over a fixed term.

If you need a car, a number of creditors specialize in car loans to folks with damaged credit.

Finally, even if you can’t get a major credit card, you might qualify for a department store or gas company credit card.

To qualify you for a mortgage, I want to see at least two or three accounts that have been active for at least 12 months.

And, here’s the most important advice I can give you. Make all your payments on time if you want your credit scores to improve.

Recovering from damaged credit

 Credit Scoring  Comments Off on Recovering from damaged credit
Apr 152015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

You don’t have to let financial hardship define your credit future. Too often, I see folks who experience a bankruptcy, foreclosure, or just financial hard times give up on credit because the hardship trashes their credit scores. I will grant you that it can be difficult to qualify for a home purchase after one of these credit disasters, but if you’re proactive, you can qualify in only a couple years.

First, understand that the bad credit isn’t going to magically disappear. Yes, there are companies that specialize in cleaning up bad credit for a fee, but they can’t make legitimate negative information go away. If you’ve experienced a bankruptcy or foreclosure, it’s improbable anyone can unring that bell.

Instead of trying to rewrite history, your job is to offset the bad credit with good credit. To that end, it’s important that you reestablish lines of credit. You may have a tough time getting a major bank credit card, but there are other options.

We’ll discuss those in tomorrow’s Star Bits.

The Credit Mulligan Bill

 Credit Scoring  Comments Off on The Credit Mulligan Bill
Oct 172014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Many of us have experienced the frustration of trying to correct errors on our credit reports. Rep Maxine Waters thinks she has a solution. Let’s talk a look at her bill she says will protect consumers from errors on their credit reports.

Some of the highlights are:

– reduce to 3 years the length of time derogatory information can remain on the credit report;
– remove derogatory information that resulted from consumers taking out mortgagess they couldn’t afford;
– remove debts that have been paid off or settled; and
– remove derogatory information related to private student loans if the consumer has made two on-time payments in a row.

Now, I’m no big fan of the credit reporting agencies, but this proposal is just silly. We should call it the “Credit Mulligan Bill.” If you screw up your credit, you simply ask for a do-over.

If something like this passes, interest rates will rise. Creditors will not be able to identify those with poor credit habits, and those with good credit will subsidize the bad behavior.

A more reasonable step towards reforming credit scoring would be for Fannie Mae and Freddie Mac to adopt the new credit scoring models that we discussed a couple weeks ago.