Friday, February 24, 2012


Credit Cleaning Tips

  • Review your credit report in detail, specifically search for errors or duplications
  • Keep revolving account balances at or below 30% of your credit limits
  • Positive payment history to your accounts also helps strengthen your file so try not to jump from one card to the next for a better rate.  Keep the zero balance accounts open Vs closing them
  • If you encounter errors on your report, write to the bureaus directly to correct the issue by providing supporting documentation and the reason it should be removed or corrected.
  • You can find assistance through Credit Counselors which are available through the various credit bureaus or hire the professionals to represent you.  
  • Federal Law requires credit bureaus to contact all creditors on items where mistakes were made.  According to the Fair Credit Reporting Act of 1971, if the creditors fail to respond to you in writing within 30 days, they are obligated to remove the disputed items from your records.
  • Most merchants are willing to negotiate customized repayment plans for those that find themselves with considerable debt.
  • Chapter 13 bankruptcies stay on an individual’s record for 7 years.  Chapter 7 bankruptcies stay on an individual’s record for 10 years.  Consumer credit counseling services (slow paid debts) are seen by lenders the same as a Chapter 13 bankruptcy and fall under those underwriting guidelines.


Liens, garnishments, etc., typically are indicators of an unstable borrower.  Any judgments, garnishments or liens must be paid in full and proof provided prior to closing.   IRS federal tax liens are also required to be paid but are some payment plans are allowed with proper documentation.  Standard property tax liens do not have to be recorded as paid in full since they are not yet due or payable.  A letter of explanation from the borrower will be required in any of the situations listed above.


One thing an underwriter looks for is a clean 12 to 24 month history with NO 30 + day late payments on your credit.  One of the most important ones is Child support.   Child support payments must be brought current, and documentation evidencing this with NO EXCEPTIONS! Because of the seriousness of the delinquency/default which in many sate can cause incarceration, a letter from the court may also be required.  A Letter from an ex-spouse and copies of personal checks are not acceptable, nor is an agreed upon, but not yet completed payment plan.




Trans Union



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