Basic Credit Requirements & Advice

Different loans require different credit requirements. But here are the basics.

  • Pay rent by checks. We will need 12 months documentable rent payments – In most cases, there are ways to get around this if the rent is paid by cash, but the process is a lot easier if we can document rental payments via canceled checks.

  • 3 accounts consumer accounts- Have 3 accounts paid as agreed for 24 months.

    • 1 account with a high limit of $2500

  • Do not have a ton of companies pull your credit. Go ahead and shop, but prior to having the company pull your credit, make sure you would feel comfortable having that company do your loan.

  • You want a 720 fico or above. But if your credit is lower, there are plenty of loan options so don’t get discouraged.

  • Unconventional Credit – If you don’t have these credit lines, FHA allows for unconventional credit. You can use a utility payment or cell phone payment. We can request a 12 month payment history from any of these companies. Just make sure they are paid as agreed.

If you don’t have the best credit. There are ways to improve credit. Some ways only take a few months. Even if it takes longer, you would be surprised at how fast a year of on time payments go.

Don’t give up. Call a professional at Sierra Home Mortgage. We have extensive experience at repairing credit.

When to Remove a Closed Account From Your Credit Report

 

You might think closing a credit card or other account might remove it from your credit report automatically. But while closing an account prevents you from using it, that doesn't mean it disappears from your credit history. Credit reports include information for both open and closed accounts. As long as they stay on your credit report, closed accounts can continue to impact your credit score.

If you'd like to remove a closed account from your credit report, you can contact the credit bureaus to remove inaccurate information, ask the creditor to remove it or just wait it out.

 

How Closed Accounts Affect Your Credit

 

Credit scores are based on several factors: your payment history, how much of your available credit you're using, the age of your credit accounts, the types of credit you're using and how often you apply for new credit. The impact that a closed account has on your credit depends largely on the type of account involved and whether you still owe a balance.

With a credit card, “closing an account causes you to lose the available balance on that card," says Rod Griffin, director of public education at Experian. "That results in an increase in your utilization rate, or balance-to-limit ratio." That could hurt your credit score, as a higher rate of use in relation to your credit limit is a sign of risk, Griffin says.

Installment loans are a little different, since they aren't revolving accounts like credit cards and don't have an effect on your credit utilization ratio. Once a loan is paid in full and the account is closed, you lose the benefit of continuing to make regular on-time payments that have a positive impact on your credit score, but the payment history remains.

Regardless of whether it's a loan or credit card, a closed account can still affect your score. According to Equifax, closed accounts with derogatory marks such as late or missed payments, collections and charge-offs will stay on your credit report for around seven years.

Closed accounts with a "paid as agreed" status, on the other hand, can stay on your credit report for up to 10 years from the date the lender reported it as closed.

When Should You Remove a Closed Account From Your Credit Report?

 

There are different situations when it makes sense to remove a closed account from your credit. What you must weigh in the balance are the potential credit score implications.

If the account has negative or derogatory information, then the closed account is likely harmful to your credit, and removing it will probably increase your credit score. If the account is one with a positive history, removing it is probably not in your best interest.

If you have a closed account with a positive history, you may be better off leaving it alone than trying to get it removed. On the other hand, you may be hoping that removing a negative closed account from your report will boost your score. In that case, you need to know what your options are.

Removing a Closed Account from Your Credit Report

There are a few steps you can take to remove closed accounts from your credit report. If one doesn't work, move on to the next.

-- Dispute inaccuracies.

-- Write a goodwill letter.

-- Wait it out.

Step one: Dispute inaccuracies.

The Fair Credit Reporting Act only requires credit reporting agencies to correct or delete inaccurate information. And even then, it doesn't happen automatically. You must first successfully dispute the information in question to have it removed or updated.

All three credit bureaus -- Equifax, Experian and TransUnion -- allow consumers to initiate disputes online or by certified mail. When initiating a dispute, you'll need to provide certain information to the credit bureau, including:

-- Your name

-- Account number

-- Nature of the information you're disputing

-- Supporting documentation to show why the dispute is valid

From there, the credit bureau must investigate your claim with the creditor or lender in question, usually within 30 days, and notify you in writing of its findings. If the disputed information is inaccurate, by law it has to be removed or corrected. Once an error is removed from your credit report, the credit bureau can't add it back in unless the lender or creditor proves that it was accurate.

That process can take care of negative information related to errors, but it may not remove a closed account from your credit report entirely. And if you're seeking a removal based solely on negative activity, that's likely to be a dead end if the information is accurate. There are, however, some other paths you can pursue to get a closed account removed.

Step two: Write a goodwill letter.

A goodwill letter is essentially a polite way of asking a creditor or lender to remove a closed account's history from your credit report. It's not the same as a dispute, since presumably you're asking for the removal of negative information without contesting its accuracy. And the creditor has no legal obligation to remove accurate information.

Writing a goodwill letter may be more effective when there are extenuating circumstances -- for example, if you defaulted on a credit card or loan because a serious illness or injury kept you out of work for an extended period. In addition to considering forces that were beyond your control, creditors may also weigh your previous payment history and whether you've made any good faith attempts to pay since you defaulted.

Some debt collectors will consider requests to pay for deletion of the collection account when consumers make a full payment or settle for less than the full amount. Offers to Delete agreements are problematic because debt collectors aren't required to remove the account even if you pay them to do so, and even if the collection account is removed, the original account with a derogatory history will remain.

For example, if you stopped paying a credit card bill for a year and the issuer sent your account to a debt collector, you could pay the debt collector to remove the account. Even if it follows through with the agreement, only the debt collector's account would disappear. The original issuer account would still remain and continue to reflect your year of missed payments.

Step three: Wait it out.

If the negative information you want removed is accurate and the creditor isn't interested in removing it, you may be out of options. But closed accounts don't last forever.

Depending on how patient you can be, you could just wait for a closed account to fall off your credit report. In the case of negative account information, it's important to understand the timing.

"Any negative information in the payment history will be deleted seven years from the original delinquency date of the debt," Griffin says.

Essentially, the clock starts ticking on negative items when they're first reported on your credit, not when the account was closed. Depending on how old the account is, it may be close to being removed from your report anyway, in which case you could just bide your time. Reviewing your credit report can give you an idea of when closed accounts may be removed.

You can get your report from each of the three credit bureaus for free once per year through www.annualcreditreport.com. And various other sites. Enrolling in free credit monitoring services can help you track credit accounts and your credit score from month to month.

Contact Us

Bryan Wild, Branch Manager

Address:

3430 Robin Ln, Ste 9C

Cameron Park Ca 95682

DRE #: 1266745

NMLS#: 26361

Direct:     (530) 677-5484

Direct:     (800) 361-9357

Cell:         (925) 788-8949

eFax:       (888) 651-2607

bryan.wild@sierrahomemortgage.com

www.sierrahomemortgageca.com

Please like us on Facebook and Yelp

Steve Samuelson

925.384.8488

Fax : 888.651.2607

steve.samuelson@sierrahomemortgage.com

DRE #: 00995394

NMLS #161692

Sierra Home/Reverse Mortgage is a dba of Professional Mortgage Associates, California Bureau of Real Estate, Real Estate Broker 01902537, NMLS 815819