Mac Church

Sterling Mortgage

Understanding Your Credit

GUIDE TO CREDIT

• PULL A FREE CREDIT REPORT — annualcreditreport.com
• 620 MIDDLE SCORE NEEDED FOR 100% FINANCING
• 2 REPORTING AGENCIES MUST REPORT YOUR CREDIT SCORE TO BE ELIGIBLE IF YOU HAVE ESTABLISHED CREDIT
• ALTERNATIVE TRADE LINES CAN BE USED FOR BORROWERS WITH NO CREDIT HISTORY: PHONE BILLS, CAR INSURANCE, RENTAL PAYMENTS (CANCELLED CHECKS)
• KEEP THE NUMBER OF CREDIT PULLS TO A MINIMUM (AVOID ON-LINE MORTGAGE LENDERS AND SIGNING UP FOR CREDIT!!)
• DON’T PAY OFF COLLECTIONS DURING THE HOME BUYING PROCESS (unless it is 4-6 months prior to the process OR required)

WAYS TO IMPROVE CREDIT

• KEEP GOOD TRADE LINES WITH LONG STANDING HISTORY OPEN (DON’T CLOSE OLDER CARDS or ACCOUNTS.)
• OPEN A SECURED CREDIT CARD
• KEEP CREDIT CARD AND CHARGE CARD BALANCES TO BELOW 50% OF THE CARD’S LIMIT
• AVOID CHARGE CARDS OR PERSONAL FINANCE LOANS WITH HIGH FEES
  (HFC / AMERICAN GENERAL FINANCE / DITECH)
• PAY BILLS BEFORE 15-DAY GRACE PERIOD
• WORK WITH MEDICAL BILLS—SEND IN PARTIAL PAYMENTS AT MINIMUM…CALL TO SET UP PAYMENT PLANS
• DO NOT MAX OUT NEW CARDS WITH BALANCE TRANSFERS. SPREAD OUT THE DEBT.
• DO NOT LET BILLS GO TO COLLECTIONS!!
• OPEN A HOME EQUITY LINE OF CREDIT AND KEEP A LOW BALANCE

Credit Card Worksheet

SPREADING OUT THE DEBT

CARD 1 LIMIT: $5,000        CARD 1 BALANCE: $4000
CARD 2 LIMIT: $3000        CARD 2 BALANCE: $2500
CARD 3 LIMIT: $2000        CARD 2 BALANCE: $1500

BRAND NEW CARD: LIMIT $8000

TRANSFER $1600 FROM CARD 1        NEW CARD 1 BALANCE: $2400
TRANSFER $1100 FROM CARD 2        NEW CARD 2 BALANCE: $1400
TRANSFER $600 FROM CARD 3        NEW CARD 3 BALANCE: $900

BRAND NEW CARD BALANCE: $3300

This example will give you positive points by keeping the three existing cards, and the new card, all under the 50% threshold.

Before making balance transfers, find out the limit of the new card so you do not risk going over the 50% threshold!!

If you have enough room to pay a card completely off, do not close the account! keep it open to keep your history.

For more information:
Phone: 540-735-1150
Email

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