Short Sale effects on your Credit Report

Seller's often wonder whether it is better to go through foreclosure or a short sale when trying to get out from under a property debt. Foreclosures might allow you to stay in the home longer; however, each situation will likely cause the same generally effect on your credit score. A short sale is bascially the same process as selling your property when it has appreciated in value; the difference is in the fact that the lender agrees to accept less than the amount owed against your home. Not all lenders will negotiate a short sale, and that is why a real estate agent or lawyer can be a tremedous help by contacting the lender's loss mitigation department to find out.

Lender's used to not even consider a short sale if you were current with your payments, but that has changed. You must realize though, that lenders will be more agreeable to negotiation if your payments are in arrears. If you do have any cash assets, the lender might try to tap into those accounts to settle some of your debt.

Your credit will take a big hit by going through foreclosure or giving the lender a deed-in-lieu of foreclosure, providing you are more than 30 days in arrears. These hits will take 200 to 300 points off your credit score, depending on the overall condition of your credit. Short sales will often cause the same 200-300 drop in your credit score. Results often vary with some short sales incidences causing only a 100 point drop in your score.

We obviously want to clear our credit as soon as possible after such an event and hopefully get back into a home again one day. A seller will often have to wait 24 to 72 months before a lender will offer any kind of interest that makes sense after such an event. With a short sale you are often able to buy a home within 2 years, where a foreclosure can often lead to a 5 to 7 year waiting period. There are no hard and set rules for either; however, over the long term short sales have historically been less damaging to your credit than a foreclosure.

Keith Dienstl is a member of the Financial Empowerment Network Team and Prime Financial Credit Services
you can also visit Ultrafitcredit for more information on Keith Dienstl.

Important Information To Check In your Credit File

Most people focus exclusively on the negative trade lines reporting on their credit file.

The following is some other important data that should be considered as well, courtesy of MSN:

Are your employer and your job title listed? If you've had the job less than two years, your previous employer and job title should be listed as well.

Is your address listed and correct? If you've been there less than two years, is your previous address listed as well?

Is your Social Security number listed and correct?

This is the way most lenders will identify you.

Is your telephone number listed and correct? Many lenders may not extend credit if they can't call you to verify information.

Does your report include all the accounts you've paid on time? Some lenders don't report regularly to credit agencies, and some report to only one or two, rather than all three.

You can ask the creditor to report the account to an agency that doesn't list it. If the creditor refuses or doesn't respond, you can send a letter to the agency with a copy of your latest statement and canceled checks to prove you've been paying on time.

Financial Empowerment Network Team and Prime Financial Credit Services

Loan mods are unintended "score mods"

A 12/28/09 article in Money.Cnn.com showed that even if you are current on your house payment, a loan modification will sometimes be calamitous to your credit score. How does this happen? First off, most loan modifications have a trial period that you are expected to perform in. If you fail to make timely payments for the first 3 to 6 months, then the modification attempt is terminated and the bank will again pursue foreclosure.

During that trial period your Note has not been officially modified, so you are, by definition, on a partial payment plan. Whether it is a partial payment plan on a credit card or a mortgage, it makes no difference. When the lender enters that data to the credit bureaus it will show negatively on your credit. Next, let's suppose you complete the trial period successfully. Once your loan modification plan is accepted, you may still have a delinquent balance carrying forward. This delinquent balance will also serve as a negative mark against your credit even though you are "paying as agreed" based on the loan modification terms.

I don't think the banks are ignorant of the affect these policies have on consumers. Lower credit scores are the pathway to charging higher rates and fees and a loan modification is just one avenue that provides a bank with that opportunity. There is a lot of give and take throughout the loan mod process along with expressed and implied terms. If you think your score has been damaged by a loan modification - remember this, the burden of proof for reporting correctly is squarely on the shoulders of the credit bureaus. To find out how to "audit" the information on your credit reports please visit my affiliate link site.

George Andersen is a member of the Financial Empowerment Network Team and Prime Financial Credit Services
you can also visit Credit Educationfor more information on George Andersen.

Your Credit Score and How it Affects You

Credit Score In our society having a good credit score has become more important than ever. Your credit history and your credit score may be used by landlords, mortgage lenders, employers, utility companies, and cell phone companies. Our society is becoming increasingly dependent on using our credit score as a determining factory to grant us service or give us any form of credit. In today's time our credit history is used for more than just getting a credit card or a low interest rate on a mortgage loan. Many businesses are using our credit history to determine weather or not we are trustworthy and uphold our contract agreement.

Renting a Home When it comes to a place to live your credit places a vital role. Landlords are skeptical on giving consumer with less than perfect score the opportunity to rent an apartment or home. The landlord base your low credit score on how you may or may not uphold to the lease agreement.

Mortgage Loan With the decline of the subprime lender, if you don't have a good credit rating you will not qualify for a mortgage loan. Before a lender approves a loan they want to feel at ease and not have to worry if the client will default on the loan. With that being said you would still like to qualify for the loan at the best rate. This is another reason is why having a good credit is so vital today.

Auto Loan With gas prices rising on a daily basis having an auto loan with the lowest interest rate will ease the blow of maintaining a vehicle. Unless you have cash to pay in full, to obtain a loan with a low interest rate a good credit score is required. Your credit score not only influences the decision of the loan being granted to you, it also determines the interest rate on the loan.

Employment A potential employer looks at an applicant credit history to determine rather or not to hire that person for the job. If your credit history shows that you have late payment, charge offs, large amount of debt and other derogatory information on the credit report, this could be a determining factor for the hiring official. Your credit history demonstrates your past financial history; a potential employer may be reluctant on hiring you for the position if you have a less than perfect credit history.

Utilities/Cell Phone Some of life necessities like your utilities and cell phone are also affected by your credit score. Many of the utility companies and cell phone companies will run a credit report before they will allow you to open an account. If your credit report shows a history of late and slow payments you may denied the service or be required to pay a deposit.

Since our credit score is so important and influence so many things in the world; it's our responsibility to have the best credit score possible. We should all strive to have the best credit score possible. By having the best credit score possible it shows any potential lender, company or employer that we are responsible and trust worthy.

Financial Empowerment Network Team and Prime Financial Credit Services

Is Credit Repair Ethical?

Most Americans know that it is possible to have information changed on your credit report, but many are concerned about whether or not it is ethical.

This begs the question: If you were to start up a credit reporting agency, how would you go about it? After all, isn't that what Experian, Trans Union and Equifax have done?

Well what would you do? The process requires that you contact a variety of financial institutions, taxing authorities, collection agencies, etc. and then propose to pool that information into one record source that could be mutually accessed by all participating members. The credit agencies love to say, "don't shoot the messenger", but in fact, they have solicited, finagled, begged, pleaded and bought their way into the "messenger" position. This is the very reason why there are 3 main reporting agencies and not just one – competition for business!

Once you understand that, the Fair Credit Reporting Act makes a lot of sense. You see, since 1971, and with numerous amendments and subsequent Acts passed by Congress, the issue at stake is not their capacity to report, but rather, the privacy of US citizens.

Trust me; these agencies would report your age, sex, religion, bank account balances, health records, blood pressure, driving record, and your grades from elementary school if they thought they could get away with it. The core purpose of the FCRA and other Acts like the Fair and Accurate Credit Transactions Act is to place the burden of proof upon the credit agencies, and NOT the consumer.

It is as if the credit agencies are writing a book on every financial relationship you've had since age 18, and they offer, on the cheap, to sell that book to anyone who wants to join the book club. When a consumer attempts to challenge the information contained on their report, they are merely calling for a "fact check" with the publisher. The FCRA requires that information contained on a consumer report be 100% accurate, complete, and verifiable.

Back to the ethics question. Let's say I own a million-dollar home with a million-dollar mortgage balance. I've never been late. Is it really EVERYBODY'S business to know how much I owe, when the debt was taken out, whom is obligated on the debt, the current balance, which bank, the payment amount – and ALL of that in addition to the payment history? Wouldn't it be sufficient to state "George pays his mortgage on time?" A person inclined to privacy might want to have that information deleted, even IF they pay on time. The fact that someone chooses to challenge the negative information is merely an expression of their right to privacy. Let's hope we never get too cavalier about that.

I am a member of the Financial Empowerment Network Team and Prime Financial Credit Services

Your Credit Score Is Yours to Control

Are you confused by credit, and how to create a better credit score? Don't feel bad, many consumers and business people find it hard to understand why their credit score is low. They pay their bills. And when they are a little late on a payment, they pay extra fees to the Lenders to make up for that. The Lenders enjoy great profits, and yet, the Borrower gets penalized more. Is it fair? I say NO! Enough! It's time for us to take control of our credit scores, and get them to reflect accurately, what kind of people we really are. In fact, the United States government agrees. Toady, there are laws to protect us, and allow us to take back control of our credit histories and credit scores.

Use these laws to make sure you aren't forced to pay more for auto loans, credit cards, mortgages, insurance and utilities. Besides costing you more money in monthly bills, we've been hearing more about people who get job offers that are later taken back, because of a "bad" credit score, a result of having been out of work for a year or longer. They didn't use credit to support a luxurious lifestyle. Ironically, they are penalized by taking away the very thing that they need to get back on their feet and to get back to paying their bills. Is it just me, or does it seem ridiculous to you as well? Credit reporting agencies, and Lenders, seem to believe that it's their right to penalize consumers to any level that they choose. The US government says it isn't their right. It is their right to report late payments and defaults on payment agreements, to the extent that they report it accurately. Is the information on your credit report accurate?

Frits Tessers is a member of the Financial Empowerment Network Team and Prime Financial Credit Services
you can also visit Personal Coaching for more information on Frits Tessers.