Tips on Repairing a Weak FICO Score

 

The importance of a good credit score

The importance of a good credit score

Overview

Understanding your credit report, and resulting FICO score, is important; repairing a weak one is crucial to your future ability to qualify for any type of loan, buy a car on credit, rent apartments or homes, or participate in any transaction requiring financing or proof of financial security.

How do I know if my credit report needs repair?

In 2003 President Bush signed into law the Fair and Accurate Credit Transaction Act.  One of its provisions required each of the 3 major credit bureaus (Experian, Equifax, and TransUnion) to provide consumers free access to their credit report every 12 months on request.  By applying on line at www.AnnualCreditReport.com, or calling them at 1-877-322-8228, you may order free reports from each of the three bureaus at the same time, or you can stagger your requests throughout the year.  The reports are lengthy summaries of all accounts you have established with lenders, such as credit cards, car loans, student loans, and mortgages. Your lenders have supplied information on the date that each account was opened, the loan/balance amount, and payment histories.  As for the resulting FICO score, the bureaus are not required to give free access; by going to FICO’s website, www.myfico.com and paying around $20, you can also order your FICO score.

Is a credit report difficult to read?

Each account on your credit report has a rating.  A sample credit report will be provided to assist you with reading your report.  You will see a letter indicating what type of account (I for individual, J for joint, etc.), followed by a number signaling the rating; a ‘1’ would be an account paid on time, while a ‘5’ could mean a late payment.  Make a note of all accounts with numbers higher than ‘1’,  and especially any that were turned over for collection… definite repair items.

If you discover a number of negative items on your credit report that are accurate, there are steps you can take to remediate your credit standing.  Repairing bad credit is a bit like losing weight; it takes time and there is no quick fix.

How can I repair my negative credit history?

1)       Pay on time!  Your payment history accounts for 35% of your credit score, and is the first thing lenders and landlords consider.  Set up payment reminders, or arrange for direct automatic deductions from your bank account and direct debits to a credit card.  Select 2 days a month to sit down and pay any accumulated bills all at once.

2)      Create a monthly budget. Track your spending for 30 days to calculate your income and expenditures, budget for those fixed expenses, and leave money for non-recurring and miscellaneous expenses.

3)      Stop using your credit cards so much.  If your credit card balances grow, and you’re only paying off the minimum each month, stop using it!  Try existing for a while on cash or a debit card, while paying down those large balances.  Constantly using more than 35% of your card limit is a red flag to creditors; try to keep usage under 20%.

4)      Don’t open a lot of new credit cards.  Too many new accounts will lower your average account age and therefore lower your score, while a long credit history with at least 3 “trade lines” or credit cards raises your score.  With that said, don’t close unused credit cards as a short-term strategy to raise your score; closed accounts still show up on your report, and canceling a credit card can drop your score by 30 points or more.  Lastly, don’t open charge accounts or credit cards with department stores; stick to established bank cards.

5)      Reach out to your creditors.  If you are surprised (or not) to find accounts that have been turned over for collection, and the charges are correct, contact the collection agency and ask them to accept a payment plan that will fit your budget.  If you have a budget, and can show how much you can pay each month against the debt, they’re more likely to accept your offer of lower payments.  Once you have paid a collection debt in full, ask for a settlement letter from the collection agency, and send a copy to all 3 credit bureaus so they can update your report.  Even though you pay off the collection account, it will stay on your credit report for 7 years but will be reflected as paid.

6)      Pay down some of your larger debts.  Total debt outstanding constitutes 30% of your credit score.  With close budgeting, consider opening 2 bank accounts…one for everyday expenses and one to be used only for making debt repayments each month.  Focus on making payments on the highest interest debt first.

7)      Seek help from a credit counseling organization.  If you’re not having luck creating a budget or working out repayment plans with a creditor, you might consider finding a reputable organization that offers in-person counseling.  Some are free non-profit organizations, and some charge.  Beware of claims for quick fixes, “erasing bad credit”, or removing negative items from your credit report with requirements to pay in advance…they’re very likely signs of a scam.

What if I find an error on my credit report?

If you discover negative items on your report that are inaccurate or incomplete, you should take steps to have them removed:

**Tell the credit bureau, in writing, what information you believe to be inaccurate.  Clearly identify each item, and include copies of any documents to support your claim.  State the facts and reasons you dispute the information

Understanding your credit score…and tips on keeping it healthy

The importance of a good credit reportYou’ve been working diligently with a good realtor for several months and have finally found your dream home.  A price has been agreed upon, and the offer has been accepted.  You meet with your lender, and all the effort and excitement comes to a screeching halt… you can’t get the mortgage because of your low credit score.

 

Overview

 

In today’s world of commonly financed purchases, whether it’s a major acquisition of a home or a minor splurge at your favorite spa, understanding and managing your credit report and FICO score has become more important than ever.  The FICO score is used in more than 90% of consumer credit decisions and has become the global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries.

 

Your FICO credit score is determined using information from accounts you have established with your lenders (think credit cards, car loans, students loans, mortgages). Your lenders supply information on the date that each account was opened, the loan/balance amount, and payment history to three major credit reporting companies: TransUnion, Equifax, and Experian. .   Your FICO score may be slightly different depending on the company that reports your credit, and the range is from 300 to 850 – the higher, the better. When you apply for a loan or mortgage, you give your lender permission to obtain your credit report and FICO score, and their decision (and frequently interest rate) is largely based on these numbers.

 

 

Managing your credit

 

Each of the three credit reporting companies are required to provide you with a free copy of your credit report once every 12 months, and it’s important to review these for accuracy.  To get your FICO score, you usually have to pay a small fee; these are considered ‘soft inquiries’ and don’t lower your score.  Once you obtain your reports, conduct a detailed review of each account to make sure balances, payment history, and number of accounts are correct.  You’re also entitled to a free credit report if your application for credit, insurance, or employment is denied because of information on it.

 

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[TIP: When a lender or business does a credit inquiry, it’s considered a ‘hard inquiry’ and can lower your credit score slightly.]

 

What affects your credit score?

 

Most of the negative events below will remain on your credit report for an average of 7 years.  While some financial disasters, such as bankruptcy, can’t always be avoided, there are other practices that can be improved.

 

1)      Late payments:  This is one of the first thing lenders consider when you apply for a loan, especially if it happens frequently.  Schedule payments ahead of time, and allow several days for mailed payments.  If you’ve forgotten to pay an invoice, call and see if the company will take a telephone payment that day.  Scheduling automatic deductions from your checking account, or automatic payments on your credit card are also methods to ensure prompt payments.

2)      Closed accounts:  Accounts that are closed, even those in good standing, also affect your record for up to 7 years.  Avoid having a large number of credit accounts; the next time a store offers you a 10% discount for opening a credit card account that day, which you’ll most likely never use, decline the tempting offer.

3)      Excessive debt: using more than 35% of a credit account limit consistently: Bumping up against your credit line and only paying the minimum payment each month identifies you as a highly leveraged risk.  Furthermore, if you add in the high interest rates being charged, you will never be able to pay it off with minimum payments.  Conversely, accounts that have been open for a long time, and those with high credit limits but low balances, can actually have a positive impact on your credit score.

4)      Collection accounts: Once a creditor sends an overdue account for collection, that record becomes part of your report.  If you pay it, make sure that the “paid collection” is noted on your report .  If you settle with the collection agency for less, that will also be noted.  Again, rather than allowing accounts to be charged-off or sent to a collection agency, work with the creditor to see if a reasonable payment plan can be established.

5)      Charged-off accounts: Rather than accepting the charge-off, try to work with the creditor on a repayment plan that might work.

6)      Foreclosure:  A foreclosure can drop your FICO score as much as 150 points.  By keeping accounts in good standing, and making all payments on time, you can start to improve your score within 2 years.  Wait at least 3 years before applying for a mortgage or other major loans.

7)      Bankruptcy: Chapters 7, 11, and 13 appear as public record items for up to 10 years after filing, although Chapter 13 filings are sometimes taken off after 7 years.

8)      Judgments:  small claims, civil claims, and child support judgments will be recorded on your report, as will tax liens.

 

After reviewing your credit accounts and scores, you may be surprised to find inaccuracies, as well as elements that just need overhaul and repair.  How to go about that? There is a right way and a wrong way to close accounts and report inaccuracies. Watch for the next blog on how to repair a bad credit report.

Staging on a shoestring….getting started

Dress your home for a successful sale!

Dress your home for a successful sale!

In a tough real estate market like this, showing your home in its best light can determine whether or not it sells quickly. Even if your home has appealing features and is priced well, it still needs to show well to gain that extra advantage.  Many sellers are choosing to have their homes professionally staged.  Professional stagers are highly skilled artists and designers, and bring in a vast array of items to “dress” each room, creating a dramatic atmosphere to capture all five senses of prospective buyers.  Staging makes your home look bigger, brighter, cleaner, warmer, and more inviting.  It’s what you do after cleaning, de-cluttering, painting, and making minor repairs. With that said, however, if you can’t afford the luxury of a professional stager, there are inexpensive ways that you can dress your home up yourself to show at its best.

 

Start with curb appeal, which is the first impression a buyer get s of your home.  Use buyers’ eyes to look at the front entrance as if you’ve never seen it before.  Clear any cob webs out, wash the front door and the area around it (or touch up the paint if necessary) , sweep or mop the stoop or porch, and if you have glass clean it on both sides.  Place a small seasonal arrangement nearby: pumpkins and dried weeds in the fall, fresh potted flowers in spring and summer, and some pine and holly berry sprigs in winter.  Replace the worn door mat…you can take it with you when you move.

 

Inside make sure all blinds and window coverings are open for showings; there’s nothing gloomier than walking into a dark, closed up home; brightness makes it seem bigger.  If you live in the home, turn all lights on for the showing before leaving, and the agent can turn them off on the way out. Try not to use overhead lights, as they will make a room seem cold…table lighting is softer and cozier.  Since you’ve already ‘de-cluttered’, carefully choose some of your most artistic knick-knacks and place them in units of 1, 3, or 5.  Position a large house plant in several rooms, and make use of smaller silk flower arrangements in bedrooms and bathroom counters.

 

A bowl of fruit (fresh or good quality fake) looks great on the kitchen table, and setting the table with new, colorful cloth place mats, napkins, and some of your best tableware looks very inviting.    Take personal photos off the walls and tables, and leave only a few pieces of your best art on the walls in each room.  If your upholstery is looking worn, slip covers and some bright new pillows can really freshen things up.  Likewise, some new, inexpensive bed spreads and designer pillows make the bedrooms look comfortable and plush, and you can take those with you, too.  If your colors are neutral, pick out a complimentary, brighter color for things like decorator pillows, silk flower arrangements, etc., and repeat that color at least 2-3 times in one room.  Try to air out the rooms before the showing, and in the winter judiciously spray a little deodorant spray around or light a scented candle; bedrooms and bathrooms can smell stale.  Bowls of potpourri also work well.

 

The bathrooms and kitchen need to sparkle or buyers can be totally turned off.  Treat yourself to some new, thick towels and bath mats, and bring them out only for showings.  Place unused soap in the soap dishes, and remove all personal bathroom items from view.  A new shower curtain does wonders, but keeps the pattern simple and the color homogeneous with the new towels. Think clean, bright, and uncluttered.

 

Nothing can guarantee a successful sale in this tenuous market, but effective staging can only help, and will appeal to the buyers’ senses and emotions.  Don’t just show your home, show it off!

Cruise the lakes in style

1136149 003Lake Geneva and Lake Delavan are two of the largest, most scenic lakes in Walworth County.  Both are rimmed with elegant lake front homes surrounded by lush gardens and landscaping.  What better way to experience the lake and enjoy the water’s edge view of it all than touring in a historic yacht?  Both lakes offer excellent opportunities for going aboard a scheduled cruise, or chartering your own floating party.

 

LAKE GENEVA

Almost any hour of the day from May through October at least one of Gage Marine’s majestic boats will be quietly gliding through the waters of Lake Geneva, bulging with wide-eyed visitors in awe of the magnificent, opulent private estates that blanket its shores.  Visitors nod in recognition of names like Wrigley, Montgomery Ward, Drake.  Gage’s presence on the lake can be traced as far back as 1873, the year the original Lady of the Lake was launched.  Before the current shoreline roads were in place, boats were necessary as the only the only access to various resorts and lake front homes.  Establishing a permanent location in Williams Bay in 1916, Gage continued to expand its services and had put the excursion business in high gear by 1958.

Adding to its inventory of yachts over the years, 8 yachts are now available for daily scheduled lake tours or private charters. They range in size from The Lady of the Lake and the Grand Belle of Lake Geneva, with a capacity for 225 people, to the Lorelei, a cabin cruiser that carries a more intimate group of 50 people.  Several are steam powered, such as the Steam Yacht Louise, and show off warm mahogany wood and gleaming brass fittings.  Most of the fleet has an enclosed main deck for comfort on rainy, cooler days, and knowledgeable guides narrate interesting histories.  The Walworth operates as one of the few remaining mail boats in the country, eliciting gasps and cheers from the on-board crowd as the mail carriers jump off the moving boat at piers around the lake to stuff mail boxes, jumping back on seconds before it moves on.  With a yacht for any size crowd and any occasion, it’s a lovely way to spend a relaxing few hours on a picturesque lake.   For information and tour schedules, go to www.cruiselakegeneva.com or call 262-248-6206.

LAKE DELAVAN

Originally built for H.J. Heinz (as in ketchup) by Consolidated Shipbuilders Corp Speedway in New York, the Cherokee was used in the 1920’s by tycoons traveling into Manhattan via water.  After having several famous owners, one being Gerald Ford, this elegant wooden yacht was purchased by Maheratime Charters LLC in May of 2012, and now calls Lake Delavan her home.

Lovingly brought back to her original grandeur by Pat Maher, she is powered by a caterpillar diesel and boasts a queen size state room aft with head and shower.  Forward of the galley are two large v births and another shower and head.  The pilot house, with an impressive expanse of glass, comfortably seats 9 guests for scenic lake views. The aft end seats an additional 9 passengers to take in the Wisconsin moonlight and stars.  So, if you’ve dreamed of entertaining on an antique wooden boat, you can charter this captained yacht to cruise the shores of Lake Delavan.  For information on chartering a cruise, or for the times of scheduled lake tours, call Maheratime Charters at 262-903-6577.

Love at first sight…the value of curb appeal when selling your home

The first thing a buyer sees.

The first thing a buyer sees.

Never underestimate the impact of curb appeal when listing your home for sale, as this is the first impression to greet a buyer.  If you have it, it draws the buyer in and signals a well-kept home inside as well as outside.  If you don’t have it, and the exterior looks neglected and run down, the buyer may immediately conclude that the inside is not worth looking at and refuse to even go in.  Dressing your front entrance to show well is one of the least expensive projects you will do to get your home ready; it merely takes some time and elbow grease.

Aside from attractive and well-kept landscaping, there are often many other overlooked areas needing improvement, from the curb to the front door.  Take a hard look with “buyers’ eyes” and use some of the following tips as a check list for a proper makeover.

1)  Front door.  Your front door should be clean and cobweb-free.  If the paint is chipping or peeling, give it a fresh coat and consider a new, dynamic color to draw the eye.  If there is glass in the door or side lights, clean it inside and out.  Use metal polish on the doorknob, and replace it if it’s past polishing. Also replace any worn out trim.

2)  Railings.  Inspect railings and balustrades, sanding and painting any chips or cracks.

3)  Hardware and lights.  Clean the metal and glass of any light fixtures, and replace any old, worn house numbers with some new shiny brass ones.

4)  Doormat.  Throw out that old, worn mat and replace it with a plush new one that blends in with the colors surrounding it. This not only looks inviting, it will make for cleaner shoes tromping through your home.

5)  Shutters and trim.  Consider integrating some of the contemporary composite or fiberglass window shutters and trim in colors complimentary to or contrasting with  the outside of your home.  They’re easy to install and relatively inexpensive.

6)  Lighting.  In addition to a porch light, inexpensive low voltage or solar lights along the sidewalk add drama and visibility, especially in areas with no street lights.

7)  Flowers.  Whether you live in a wooded area or on a sunny street, container pots with fresh flowers in the summer add inviting lush color around the front door.  Additionally, window boxes installed under nearby windows can continue the color theme.  In winter, buy inexpensive pine boughs and spruce tops at your local
nursery to insert into the pots and window boxes, along with some sprigs of colorful berries.

8)  Mailbox.  Dress up (or replace) a tired mailbox with paint, stain, fresh numbers, and anything that coordinates it with the home design.

9)  Gutter and downspouts. Distressed gutters with holes in them and full of leaves signal neglect.  Repair any holes, touch up any paint wear spots, or replace sections.

10)  Porch and front stoop.  Stone tile in luscious colors and textures can be laid over cement floors of a porch or stoop for an attractive update.  For less work and cost, cement floors can also be painted with an outdoor paint to blend with surrounding colors and sparkle with freshness.

11)  Walkways and driveways.  Chipped and missing pavers and sections of cement and stone walkways not only look run down, but can be a safety hazard for a buyer to trip over and should be repaired before any showings. Driveways should be weed-free, with any cracks filled in.  A fresh seal coat on an asphalt driveway can make it look new and prevent further cracking.  To really dress up a tired walkway or driveway, try adding some contrasting pavers along the sides.

When you home is actively listed, leave the outside lights on until later in the evening to show off your hard-earned curb appeal.  If it’s a second, vacation home, leave some lights on timers.  Make arrangements to keep your lawn mowed, leaves raked, and snow shoveled when needed, especially if you’re not there often.  All of this attention to details will make your home stand out, bringing more buyers eager to see inside, and can pay you back with a fast sale at a better price.

Geneva National condo on Trevino #16

1321673-01Totally updated, partially furnished 2-bedroom condo in gated Geneva National, with panoramic views of Trevino #16.  The only ranch style Eagleton, all on one level.  Vaulted ceilings, open concept,  expansive windows, fireplace, turn-key and pet friendly.  The 1-car garage was converted to a billiard room, but could be easily returned to a garage.  This condo is elegantly finished, with lovely furnishings.  Enjoy all the amenities of Geneva National…pools, tennis, hiking trails, gated security, 3 18-hole Championship golf course, club house, fitness center, and indoor-outdoor dining.  All just 10 minutes from downtown Lake Geneva and its lakefront.

Listing Price: $ $173,500
Address: 921 Eagleton Drive
City: Lake Geneva
State: Wisconsin
ZIP: 53147
MLS #: 1321673
Bedrooms: 2
Bathrooms: 2

Private lake access & great lake views!

Private lake access to Lake Geneva

Private lake access to Lake Geneva

Enjoy scenic lake views and private access to Lake Geneva from this charming cottage style 4- bedroom bungalow.  Just steps away from one of Cedar Point’s private lakefront parks, this year-round home offers outside relaxation on 2 wooded, landscaped patios.  Inside features include a large sun porch, updated bathrooms and kitchen, living room with a natural fireplace, main floor master bedroom with walk-in closet, and a formal dining room.  The lower level has a family room with full windows, a second full kitchen for entertaining, 2 bathrooms, and a 3rd and 4th bedroom.  All the privacy of desirable Cedar Point Park, and walking distance from Williams Bay’s popular beach, restaurants, and shopping. 

Listing Price: $ $575,000
Address: 525 Wilmette Rd
City: Williams Bay
State: Wisconsin
ZIP: 53191
MLS #: 1313784
Bedrooms: 4
Bathrooms: 3

Elegant Delavan Victorian Lakefront Home

Wooded lake frontageBuilt in 2005 to replicate a by-gone era, this elegant Victorian lakefront home is tucked between 2 acres of scenic woods and 67 feet of level Delavan lake frontage. It’s 6 bedrooms , 8 bathrooms, and large spaces with expansive lake views accommodate gracious lakefront living and entertaining with ease. Some of the many quality features include inlaid floors, Kohler designer fixtures, granite and stainless steel high-end appliances, and hand painted Italian tiles. There are 3 attached heated garages, and 4 detached heated garages with a 3-room 1-bath studio above. The exquisite landscaping and terraced patios lead down to the pier.

Listing Price: $ $1,499,900
Address: 1808 North Shore Drive
City: Delavan
State: Wisconsin
ZIP: 53115
MLS #: 1304119
Bedrooms: 6+
Bathrooms: 8

Exquisitely designed high end home on 4.5 wooded acres!

Elegant Geneva National home on 5 wooded acres and pondElegantly finished, exquisitely designed 5BR 4BA home on 4.5 private, wooded acres facing a pond in gated Geneva National, just 5 minutes west of downtown Lake Geneva. Numerous design features include:2-story great room with expansive windows; gourmet eat-in itchen with granite counters, Viking appliances, and inlaid maple floors; first floor master suite with French doors leading to a deck, large walk-in closet, and master bath with whirlpool, dual vanities, and ample shower with multiple jet nozzles; den with fireplace; formal dining room; lower level family room with fireplace and adjacent wine cellar; 4-car garage, and much, much more. Enjoy Geneva National amenities with 3 championship golf courses, swimming, tennis, and dining!

Listing Price: $ $1,799,999
Address: 1655 Woods Way
City: Geneva
State: Wisconsin
ZIP: 53147
MLS #: 1288536
Bedrooms: 5
Bathrooms: 4

Walworth County Housing Market Shows Signs of Improvement

After more than 7 years the housing market is showing signs of improvement not only in Walworth County, but nation-wide. Even though it seems like we’re still in a miserable spot, the numbers speak otherwise and show a slight upward movement.

Walworth County home prices have shown  increases in many areas; while there are still foreclosures sneaking in, most have been purchased and they don’t seem to be affecting pricing on non-foreclosed properties as much as they did. Appraisers are finally not using them as straight comparables for sales, and even buyers recognize them for what they are.  Investors have also returned to the market, buying homes at rock bottom prices to rent out, a sign of confidence that the market has bottomed out.

A huge indicator in Walworth County is that the average days on market that it takes to sell a home has declined significantly compared to the same time a year ago, and the inventory of unsold homes has finally shrunk to a ‘normal’ level of six month’s worth; part of this lower inventory might be due to sellers holding onto homes until the market improves, but it still has the effect of taking competition away from those currently listed. Lastly, builders nation-wide began work on more single-family homes in May 2014 than in May 2013, and the stock of newly built homes is back to 2005 levels.

Although the housing market still has a long way to go, at least the numbers seem to be inclining instead of declining. Interest rates are also still at an all-time low, with rates in the 4’s for a 30-year fixed loan, and even lower for adjustable rate mortgages. Banks also seem more willing to work with sellers on ‘short sales’, where the price the home owner gets in a sale is not sufficient to pay off the mortgage and the bank agrees to write off the difference. This helps the seller avoid foreclosure (and bad credit ratings), and actually saves the lender the cost of going to foreclosure. In summary, this is still a wonderful window for buyers and is looking better for sellers all the time.