We Are Featured in At Home Magazine!

We are happy to share that Michelle Black of the HOPE Program has a featured article in At Home Magazine this month!  You can pick up a copy of At Home Magazine at your local Harris Teeter, BP gas station, or Lowes Food Store.  For your convenience, see below for a copy of the article as well:

Where Do Credit Scores Come From? By Michelle Black, Co-Owner, HOPE (Home Ownership Program for Everyone)

It is true that credit scores affect our lives in many important ways.  First, anytime you apply for a mortgage, car loan, credit card, or financing of any kind your credit score will be looked at by an underwriter.  The underwriter then decides whether you are approved or denied.  If you are approved, your credit scores are looked at again to determine what kind of interest rate you will receive.  As you can see, credit scores are the #1 factor considered when you apply for a loan.

Since credit scores are the first key to loan approval, let’s talk a little about where these credit scores come from and how they are calculated.  There are 3 major credit bureaus in the US:  Equifax, Trans Union, and Experian.  Each credit bureau gives us a different score.  The following chart shows the basic makeup of a credit score with any of the 3 major credit bureaus:

Payment History, an individual’s history of paying bills on time, accounts for 35% of our credit score. If a person has a high percentage of late payments on bills then his/her credit score will be lower.  It may sound crazy, but late payments can lower a person’s credit scores more than any other factor including bankruptcy, foreclosure, or repossession.  One late payment can actually drop someone’s credit score 30-100 points (especially if it is the first time a late payment is appearing on the credit report in a while).

Amounts Owed account for 30% of our credit score.  This factor can be somewhat confusing.  The credit bureaus will look at the amount of debt being carried by a person and compare it to that person’s available credit limit.  For example, if you have a credit card with a $500 limit and you owe $490 on the card then your credit score will be lowered.  However, keep that same credit card paid off your credit score will be higher.  High credit card balances can significantly lower your credit score, even if you pay your monthly bill on time!

Length of Credit History makes up 15% of our credit score.  The credit bureaus look at the age of a person’s open credit lines to determine how many points will be awarded or taken away from the credit score for this category.  The older the accounts appearing on your credit report, the better.  Opening a new account can potentially lower your credit score even if you have never missed a payment on the account.

New Credit makes up 10% of our credit score.  This refers to how often a person applies for new accounts.  Every time your credit report is pulled to apply for a loan your score is lowered 1-3 points and you do not regain those lost points for about 90 days.  However, a “soft pull” of your credit report (that is an individual requesting a copy of his/her own personal credit report to review the file) does not hurt your credit score at all.  If you have not reviewed your credit report in a while, you are entitled to a free copy every year from www.annualcreditreport.com.

Types of Credit Used account for the final 10% of our credit score.  It is important to have the right balance of accounts on your credit report.  Too many accounts can hurt your credit scores, but so can too few accounts.  Also, loans with consumer finance companies (i.e. paycheck advance loans) will hurt your credit scores just by opening the account.

Credit reports and scores can be quite tricky to navigate alone.  If you are facing credit problems or even if you simply want to improve your already “good” credit into “great” credit it is best to seek the guidance of a reputable credit expert.  We would love to invite you to contact our credit experts at HOPE (Home Ownership Program for Everyone) to see how you can improve your credit score quickly and effectively.  In the last 9 weeks alone HOPE has had 49 graduates to complete our program with credit scores high enough to qualify for a home loan!  All 49 graduates had been turned down for a home loan prior to joining HOPE.  We would love to help you achieve your personal success story too!  Please visit us online at www.hope4usa.com or call 704-499-9696 today for more information.  We can’t wait to hear from you!

Facebook

We are happy to announce that you can now follow the HOPE Program on Facebook!  Stay on top of the latest updates, events, and announcements from HOPE right on your Facebook page.

The HOPE Facebook page will feature weekly articles and insights to help you learn even more about how to achieve a healthy credit report and how to improve an already healthy credit report.  Plus, you can "share" these articles and insights with your Facebook friends easier than ever before.  Click here to visit our Facebook page now.  We hope you "like" what you see!

Congress extends deadline for home-buyer tax credit

Congress late Wednesday night extended the deadline by three months of a popular home-buyer tax credit that has helped fuel the real estate market in recent months.

The extension is only for those buyers who signed a purchase contract by April 30 and need extra time to close their deals. The deadline to close was Wednesday and the extension will push that deadline to Sept. 30. The incentive offers up to $8,000 for certain buyers.

Real estate brokerage offices and mortgage lenders have been backlogged with the number of people trying to close their deals by the Wednesday deadline, according to the National Assn. of Realtors, a group that lobbied heavily for the extension. The group estimated that the extra time would assist some 180,000 people nationally and 17,700 Californians who qualify for the credit but did not appear as if they would meet the Wednesday deadline to close their deals.

The President is expected to sign the bill soon.

Signs You May Need a HOPE Credit “Tune Up”

Signs You May Need a HOPE Credit “Tune Up” -You want higher credit scores

–You have been turned down for a loan

–You have collection accounts

–You have made late payments within the last 2 years

–You have major credit issues (bankruptcy, repossession, foreclosure, charged off accounts, etc.)

–If your answer is yes to any of the above we will be glad to schedule an appointment for you. Call today us at 704-499-9696

10 Myths About Credit Scores

I ran across an article by Mary Fetzer that I tought was worth sharing with you:

10 Falsehoods About Credit That Can Cost You.

Facts and Falsehoods

When it comes to finances, it's important to know where you stand -- especially with something as important as your credit score. Are you clear on how to boost your score? "You have to be careful who you listen to," says Dan Beck, president of Credit Management Specialists, a credit-restoration company in Greeley, Colorado. "Following the wrong advice can impact your score in a negative way." Here, we present the 10 most common (and most costly) falsehoods about credit.

Falsehood No. 1: I have one credit score, and it's locked in for a year.

Fact: The three credit reporting agencies -- Equifax, Experian, and Trans-Union -- operate independently and do not share data. "The information each reports is very different," says Kate Lister, author of Finding Money. Accordingly, your credit reports and scores will differ from one agency to another, which is why Lister recommends getting a copy of each report every time you check your credit. And because your score is constantly changing (it's recalculated whenever your credit report is pulled), "Review your credit report at least every six months to look for inaccuracies," says Ann-Marie Murphy, co-founder of Quizzle, a credit-management site for consumers.

Falsehood No. 2: I shouldn't check my credit too often, because a lot of inquiries can lower my score.

Fact: "You can check your credit report through a credit bureau as often as you like with no negative impact," says Lynnette Khalfani Cox, a personal-finance expert. Checking your own credit is considered a "soft inquiry," which has no bearing on your credit score. Other soft inquiries are those made by existing lenders reviewing your account and lenders trying to offer you pre-approved credit.

Falsehood No. 3: Closing unused accounts lowers my available credit and will improve my score.

Fact: Not so. While it feels fiscally responsible to close out an account that's at zero, it's actually a big zero for your score. "Credit utilization is how much credit you use compared to how much credit is available to you," Murphy says. By closing accounts, you're decreasing the amount of credit available to you, so your proportion of credit used will be higher -- and that makes you a higher risk in the eyes of lenders, she says. And closing old accounts also removes your history, one of the biggest things that factor into credit score, Lister says. "If you cancel a credit card that has a lot of history, you may hurt your score," Lister says.

Falsehood No. 4: Paying cash and carrying no debt will help my credit score.

Fact: "Having no credit history or never using credit has a negative impact on your credit score," says Cox. "FICO reports that people with no credit cards tend to be higher risk than those who use credit cards responsibly." The longer you have an account and pay on time, the greater the benefit to your score.

Falsehood No. 5: All debt is created equal.

Fact: Various types of credit will impact your score differently, and 10 percent of your score refers to your mix of credit. "If you are heavy in one area of credit, your score may be lower," says Hallie Hawkins, co-founder the Certified Credit Report Reviewer Certification Program with the Institute of Consumer Financial Education. But the credit-scoring systems are chiefly concerned with credit-card debt. Though your mortgage or student loans are important, "Focus on lowering your credit card utilization in order to get a big boost in your scores," Cox says. "Having a big credit-card debt will hurt you."

Falsehood No. 6: Paying off my credit-card balances every month improves my credit score.

Fact: Not necessarily. "When you pay off your credit-card bill, the bank doesn't notify the credit bureaus," says Wayne Sanford, author of The Credit Reality Today. And if your credit is pulled mid-month, before you pay your bill, your score will reflect that balance. "The only way to be sure your balance shows as zero is to cease using the card for a month or more," says John Rackley, a certified mortgage-planning specialist. "Unfortunately, this is an example of how someone who handles their credit responsibly can be penalized by the credit-scoring system."

Falsehood No. 7: If my debt is less than 30 percent of my income, it has a positive effect on my score.

Fact: The credit-scoring agency has no record of your income, and is therefore not factored into your credit score, says credit administrator Michele Brander. What's vital is that you establish your ability to pay your debts on time.

Falsehood No. 8: Incorrect personal information negatively impacts my score.

Fact: Your personal information has no impact on your credit score. "Income, employment history, race, religion, national origin, gender, marital status, and age are not factors in credit scoring," Brander says.

Falsehood No. 9: Once a collections account is settled, derogatory information will be removed from my report.

Fact: Paying a collection account in full is the fiscally responsible thing to do, but it won't make the collection red mark on your report go away. The account may be marked as paid in full, which is important, but it will remain on your credit report for seven years, says Hawkins.

Falsehood No. 10: One missed payment won't hurt my credit score.

Fact: Think again before you flake out on that one payment. "The single biggest determinant of your credit score is how well you've paid your bills in the past," says Cox. Credit-scoring formulas take into account your late payments, how late they were, and how long ago the late payments occurred.

Free of Falsehoods

"Ignorance is not bliss when it comes to your credit score," says Murphy. Now that you're free of falsehoods and armed with facts, you can take complete control of your credit score.