Credit Challenges


Your credit can make or break your loan. In some cases, a blemish on your credit can increase your rate. Understand and practice the following to give you a better position when asking for financing.

Ace Mortgage Group helps you understand the basics of your loan

decision:

CREDIT – Score is a major factor. In addition to score, the amount of tradelines (a mortgage, an auto loan, a credit card, or a collection), any derogatory credit is measured and evaluated, and overall how did you handle the credit you obtained.

INCOME – Your income is important in relation to the amount you wish to borrow. Most importantly regarding income is stability. Have you been in the same line of work for 2 or more years? Any income that is unverifiable will not be used.

ASSETS – With the credit you’ve been extended, and your consistent income, have you shown the ability to save? Assets are a key piece in situations where you may ask to state your income with a lender. Once you determine your monthly housing payment(s), the lender will normally look for 2 months reserve in case of emergency. If you are applying for an Investment loan, your lender will look for 6 months reserve from your assets.

PROPERTY – Value vs. your loan amount is weighed. The type and condition of the property can sometimes cause an issue with a lender. Appraisal or other inspections can be required to obtain financing. Health and safety issues are usually corrected before a lender will lend on a property


These four general areas will determine a YES or NO from the lender.

If you are strong in all areas, you are considered an A+ borrower. If you are strong in 3 but weak in one, you may be considered a A- borrower. If you are weak in two areas but strong in two, a B borrower and so on…

Score may not be everything, but increasing your credit scores will give you the best postion when asking for a loan. Follow these steps to help boost your scores:

Look over your revolving debt and determine what 40% of your credit limit is. This dollar figure is the highest you should ever charge on that tradeline.

As a rule of thumb choose 3 main revolving lines and keep them open. Opening and closing cards hurt your scores. Any card you have open for 12 months becomes a positive impact on your credit. While a card is new it hurts your score until you begin using it (up to 40% of the limit) and show a payment history on it.

Don’t apply every chance you get! Too many inquires on your credit can decrease your scores. You should try to limit the number of inquires to 6 per 12 months. Remember if you are applying for a car or mortgage, you may receive more than one inquiry, so beware.
Make all of your payments on time! A past due payment can drop your score anywhere from 30 – 100 points (no science to narrowing it down). Once your account is current it brings the score up some but then you’ll show a 30 day late. If you continually make your payments late, your loan can be declined without compensating factors.

Stay on top of collection accounts, judgements or collections. The cleanest way to dispute a bill before it goes into collections is in writing. Keep a clear record of what you did, who you talked to, and get any promises in writing. If you make any payments, get a receipt or letter acknowledging your payments and current balance. Continue to keep this record for up to 7 years from the latest instance. You have rights but they must be executed according to the credit laws.

Bankruptcy. Keep complete records of your bankruptcy. Loose strings are common. Most lenders will request some part of your paperwork for clarification.

Consumer Credit Counseling. Beware! Lenders look at this the same as bankruptcy. Many times, the recordkeeping is not as clean as a bankrupcy and can cause a headache in the future. You will be better off negotiating payments with your credit card companies yourself and documenting your progress.

Opt-out. You can increase your credit score and stop unwanted solicitations from credit card companies by opting out at the following website: www.optoutprescreen.com

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