How to Pump Up Your Credit Score, according to the New York Times, May 17, 2012: http://www.nytimes.com/2012/05/20/realestate/mortgages-how-to-pump-up-your-credit-score.html?smid=pl-share.
According to the NYT, banks are tightening up lending requirements for mortgages and credit scores have a substantial impact on whether you can get a bank loan and what the interest rate will be. “A majority of banks are less likely to offer loans to people with a FICO credit score of 620 and a 10 percent down payment than they were in 2006 … [and] Lenders were also less likely to do so even for those with a score of 720.”
The two biggest factors that affect your credit score according to FICO, says the NYT, is “your payment history, which accounts for 35 percent of the score, and the amounts owed, accounting for 30 percent,” and reducing your balances on credit cards can help improve credit scores under the FICO model. A late payment occurring during the month that you apply for a mortgage loan “can be deadly,” according to the Director of Counseling at the Housing Development Fund, Stamford, Conn.
For these reasons, at CELCWI, we advise people to get your consumer reports from Experian, Equifax and Trans Union through www.annualcreditreport.com before applying for credit. Review the reports for any inaccuracies, and then dispute the inaccuracies with the consumer reporting agencies, in writing. If the inaccuracies continue after the disputes, consumers do have legal options to correct the reports and recover any resulting damages.
Your credit reports are typically obtained by the company servicing your mortgage loan if you apply for a Home Affordability Modification Program ( HAMP ). The credit report is used under HAMP mortgage modifications during the application process to verify your eligibility for the HAMP modification. The credit report is used to verify the borrower’s principal residence, ensuring that the loan relates to a mortgage on your principal residence.
HAMP Supplemental Directive 09-07 contains the requirement that the loan is one “secured by a one-to-four property, one unit of which is the borrower’s principal residence.” Supplemental Directive 10-01 tells servicers of loans to use a credit report to confirm that the property securing the mortgage is the borrower’s principal residence.
Therefore, if you are preparing to apply for a HAMP modification to your home mortgage, you may be well served by obtaining your consumer reports from Experian, Equifax and Trans Union beforehand to ensure that each consumer reporting agency accurately reflects your home as your primary residence. If the reports are inaccurate, you can send the credit reporting agencies disputes to correct the information. You can also obtain these reports from www.annualcreditreport.com, which you are entitled to a free annual credit report every 12 months from each credit reporting agency. Otherwise, you may have to pay a small fee to get your current credit reports. This may save you some time, work and headaches in trying to explain any discrepancy that arises after you make the application.
Many people are modifying their mortgages under the HAMP program. Typically, a consumer must be at least one payment behind on their mortgage to qualify for the HAMP program. So when a consumer enters the HAMP program and modifies the mortgage loan, the accurate reporting of that mortgage on the consumer’s credit report is basically, whatever the loan status was when it entered modification. So if the loan was 60 days late, the credit report entry on that loan should show “60 days late.” The status should not change, particularly it should not get any worse, so long as the consumer continues to make timely payments. If the loan was not late when it entered the modification, then it should not be reported as late in the consumer’s credit report after the modification. If the consumer’s credit report says the loan was “settled for less than full amount” or “paying through credit counseling” or something like that, the entry on the credit report is probably not accurate. A consumer can dispute this entry using the dispute procedures. I have more about disputing credit reports on my website www.attorneyleech.com.
Experian, Trans Union and Equifax, are the 3 major consumer reporting agencies or credit reporting agencies as they are commonly known. They use scoring models to determine your credit score. Sometimes, when the scoring model they use think you are dead, you won’t get a credit score. We see this happening sometimes when a spouse dies, and the surviving spouse cannot get a credit score. It typically means that the agencies are taking the deceased entry from one of the joint accounts and misapplying it to the surviving spouse. If this is happening to you, you will likely need to submit a dispute to the credit reporting agencies making the mistake. I have more about disputing inaccurate credit reports at my website www.attorneyleech.com.
As of April 22, 2010, the Trans Union website provides the following address and other information for adding a consumer statement to your consumer report:
To add or remove a consumer statement on your credit report, send your consumer statement or removal request along with your name, address, and TransUnion File Identification Number (FIN) on your credit report to:
TransUnion Consumer Relations
P. O. Box 2000
Chester, PA 19022
If you would like assistance in writing your consumer statement, please call us toll-free at 1-800-916-8800, Monday through Friday, 8:00 a.m. – 8:00 p.m. ET, excluding major holidays. If you are a resident of Hawaii or Alaska, representatives are available to assist you Monday through Friday, 8:30 a.m. – 4:30 p.m. in your local time zone, excluding major holidays. If you already have a copy of your TransUnion credit report, be sure to have your TransUnion File Number available when you call.
You should add a consumer statement to your consumer file after you submit a dispute over an entry on your reports that remains inaccurate after the consumer reporting agency ( credit reporting agency ) completes its re-investigation of your dispute.
Generally, I advise people to dispute using a means that you can track exactly what you communicated about your dispute, when and that you have evidence to show that the consumer reporting agency, like Equifax, Experian or Trans Union, received your dispute. Sending a written dispute by U.S. First Class mail, certified return receipt, is really the best means to accomplish this objective. You keep a copy of what you sent, enclosures and all, and the postal receipt for the money you paid to send the letter. Keep the green card when you get it back. This is good evidence that you submitted your dispute and when the consumer reporting agency received it.
As of February 24, 2010, Equifax’s website tells consumers to send a Consumer Statement regarding an entry in a consumer report, also referred to as a credit report, to the following address:
Equifax Consumers Services
PO Box 740256
Atlanta, Georgia. 30374-0256
The statement is suppose to be brief, explaining the nature of your dispute. A consumer reporting agency such as Equifax may summarize your statement if it is more than 100 words.
The Fair Credit Reporting Act, a Federal law, gives you the consumer the right to dispute any inaccuracy in your credit reports–also known as consumer reports with the consumer reporting agency that is reporting the inaccuracy. While most consumer reporting agencies provide for you to dispute the information through the internet or by phone, I always recommend that consumers make written disputes by mail. These seem to get the best attention, and if you send it by certified return receipt and keep a copy of the dispute, you have the best evidence that you have in fact disputed the inaccuracy.