loanmodificationForeclosure, Deed in Lieu of Foreclosure, Short Sale, Loan Modification and Bankruptcy can all have long-lasting impact on an individual’s ability to obtain credit. Homeowners need to get the facts before making critical decisions that will impact their lives for many years to come. In this series of seven blogs, I’ll be examining each of these options in detail so you can get a better understanding of the myths and realities surrounding them and how they affect your credit.

One of the recurring themes in my book, The Big Score, and something I always emphasize to my clients is that being proactive the key to ensuring your credit score is as high as possible! In the case of your mortgage, the way to do this is by trying to renegotiate the terms of your agreement before things get out of control.

Loan Modification

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shortsale1For years, credit experts, including me, have told people that a foreclosure is the worst possible option for homeowners who are upside down in their mortgage and is something to avoid at all costs.

One of the alternatives to foreclosure that homeowners have is a short sale, which is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship that is usually related to the current real estate market climate and the individual borrower’s financial situation. The homeowner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt.  Unfortunately, some of the characteristics of a short sale are changing in a way that can potentially hurt your credit even worse than a foreclosure, and here’s why.

It used to be that only homeowners facing a foreclosure had to worry about being sued for the deficiency amount on a foreclosure sale. It all depended on what state you were in, and whether or not the loan was a recourse or non-recourse loan.

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All Credit Experts Are Not Created Equal

June 14, 2009

Close Credit Cards-Pay Everything In Cash
Pay Off Collections Before Applying for A Loan
Close Accounts You Don’t Need or Use
Paying Off Your Auto Loan Will Help Your Credit
All sounds like great advice, right? And it may be for some things, but I can tell you first hand that all of these items will negatively impact your [...]

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Recent Changes in Credit Scoring and Reporting and How They Affect You - FICO 08

June 12, 2009

While the roots of the modern credit report can be traced all the way back to 1898, the numerical credit score wasn’t devised until the 1950s and didn’t become a major part of the American financial system until the last twenty years. In 1956, Bill Fair and Earl Isaac devised analytical tools that attempted to [...]

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The Mortgage Crisis and Your Credit Part Three: Deed in Lieu of Foreclosure

June 9, 2009

Foreclosure, Deed in Lieu of Foreclosure, Short Sale, Loan Modification and Bankruptcy can all have long-lasting impact on an individual’s ability to obtain credit. Homeowners need to get the facts before making critical decisions that will impact their lives for many years to come. In this series of seven articles, I’ll be examining each of [...]

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The Mortgage Crisis and Your Credit Part Two: Foreclosure

June 4, 2009

Foreclosure, Deed in Lieu of Foreclosure, Short Sale, and Bankruptcy can all have long-lasting impact on an individual’s ability to obtain credit. Homeowners need to get the facts before making critical decisions that will impact their lives for many years to come. In this series of seven blogs, I’ll be  examining each of these options [...]

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The Mortgage Crisis and Your Credit Part One: No Laws Requiring Lenders To Report To The Big Three

May 18, 2009

 “Is it better to file for bankruptcy or to be foreclosed?”
“What is a short sale and how can it affect my credit?”
“What about a Deed In Lieu of Foreclosure? Or a Loan Modification?
“What should I do?” 

Every day, these questions are asked of me by frightened homeowners who are quickly trying to respond to the financial [...]

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How Does Bankruptcy Affect Credit

May 13, 2009

A bankruptcy is reported on your credit report as a public record, and there is no doubt that your scores will drop anywhere from 100-300 points when it first hits, depending on how many points you still have to lose in your payment history factor. Keep in mind, by the time you have filed bankruptcy [...]

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Consumer Credit Protection Laws

May 7, 2009

Your Rights:  The Consumer Credit Laws You Need To Know About

Fair Credit Reporting Act (FCRA).  The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. Consumer reporting agencies include the credit bureaus and specialty agencies (such as agencies that sell information about check [...]

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What To Do If You Don’t Have Credit

May 7, 2009

If you do not have a credit history, then it’s time to start building one. But the question is, how do you get credit if you don’t have credit? Here are some great tips:
First, if you do not have credit, lenders and banks may look to other factors that can help them decide if you [...]

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