Credit 101

Everyone has 3 Credit Scores : Transunion, Experian, Equifax

* For home purchases the lender throws out the top score and the bottom score (not an average)

* Many companies do not report to all 3 bureaus – This is the reason the scores are different

* Each credit company puts different values on positives and negatives – Another reason the scores are different

* The credit bureaus are PRIVATE BUSINESSES – They are not part of the government

BASIC Credit Requirements to Buy a House

• FHA = 620 (yes there are programs lower but its rare)• Conventional = 680 • No lates in the last 12 months (and anything in the last 24 months will need explanation)• Collection limits• No Judgments• No Tax Liens• Must not be delinquent on student loans (repayment or deferment is fine)

4 Causes of Bad Credit

1) Divorce

2) Loss of Job (or failed business)

3) Medical

4) Stupid things we do when we are 18

Common Misconceptions on Credit

1) I paid off my car (house, student loans, ect) so my credit score is going to go up. FALSE 2) Those negatives are all going to fall off after 7 years. FALSE3) My wife (husband) got the house (car, cc, ect) in the divorce so that is not my problem. FALSE4) I just co-signed for the car, I don’t make the payments so it doesn’t count against me: FALSE5) I pay cash for everything so my credit is great: FALSE6) I will just file Bankruptcy and it will all go away: FALSE7) I can’t get credit at Best Buy (Lowes, Home Depot, ect) so there is no way I can buy a house: FALSE8) I just got a new car so my credit is good enough to buy a house: FALSE9) I pulled my own credit online and it was 650 so I will have no problem with the lender: FALSE10) I am paying a credit repair company so it is all going to go away: FALSE

What to look for when leasing

• Are the negatives old or new?• When was their last late payment?• Do you see a pattern?• How much debt do they have?• Is what they told you true?• Judgements?• Score does not always define their credit worthiness for a rental

The Ten Commandments when Applying for a Mortgage 

1. Thou shalt not change jobs, become self-employed or quit your job

2. Thou shalt not buy or lease a car, truck or van (or you may be living in it)

3. Thou shalt not use credit cards excessively or let current accounts fall behind

4. Thou shalt not spend money you have set aside for closing

5. Thou shalt not omit debts or liabilities from your loan application

6. Thou shalt not buy furniture or any larger purchase

7. Thou shalt not originate any inquiries into your credit

8. Thou shalt not make large and/or cash deposits without checking with your loan officer

9. Thou shalt not change bank accounts

10. Thou shalt not co-sign a loan for anyone

Thank You!!!