Whats NEW in Mortgages Today

Over the years in the financial and mortgage business I have seen more credit reports than the average person. It used to be that the credit report with low scores was something I would see every once in a while. These days, seeing the great credit report is the exception. It seems as if the tides have turned in this department.

The economy is tough all over. In these tough economic times people make the hard decisions for themselves and their families. Food, shelter, clothing, heat, electric, etc....the basics will take the front seat. Credit card bills and other expenses have been getting the least attention from many consumers.

When these decisions are made, often times out of necessity, the damage lasts for quite some time. Late payments on your credit report will cause consequences that have a very negative effect for a number of years. Sadly, bad credit is more common the past few years than I would care to see. It would be great if the frequency in which we came across bad credit reports was far less than what it is.

Statistically, when a real estate agent hosts an open house, approximately 80% of all individuals have poor credit.  That means that 8 out of 10 people would not even qualify for a mortgage. The remaining 2 might have average or good credit. In this lending environment, those remaining credit worthy customers now get to deal with a lender who has raised the factors for eligibility so that a credit score is simply like a "key for the door", so to speak. Now there are debt ratios, disposable income requirements, etc.

When I come upon a client with bad credit, slow or late payment history, collections, etc., there is a conversation that occurs with that customer. Every customer is unique and every credit report is different. Regardless of what is within each credit report, the customer is now faced with two choices. For the sake of this topic here and to keep it as simple and realistic as possible these two choices are truly all that remain.

First, and most obvious, is to identify the problems and address them head on. Sometimes the credit report contains only one or two simple problems and a consumer can often times remedy those on their own. There are certain procedures that need to be followed in order to insure these problems are handled correctly. Most consumers simply do not have the experience to take care of the issues on their credit report.

Credit repair companies have popped up everywhere over the years. Some are fly by night "companies" but there are some legitimate, long standing companies that perform very well. They provide a real service and get real results. Years ago these companies would charge thousands of dollars for their services. Now, companies that offer legitimate services are doing it for less than $50 a month.

The second choice that a consumer is faced with is to simply maintain the status quo. Doing nothing is considerably easier than doing something about a problem that has given a consumer such anxiety. Face it, most people don't like to address their problems. They will rationalize very easily and quickly that they don't need that new house, or that they are "ok" paying a high interest rate on their cars, and that credit cards aren't something they really needed anyway.

Taking no action is always easier than taking some action towards whatever the problem is. The sad reality is that the majority of people lean towards doing nothing at all. Invariably, these very same consumers will wait a while, let some time go by, and then call another mortgage company hoping and possibly expecting the answer they want. What they hear is nothing more than the exact same they were told when they had a conversation about their bad credit.

Taking a stance to address your poor credit will definitely bring you rewards. I have NEVER seen a single customer that chose to take action where it didn't cause serious positive effects for them. For less than $50 a month a quality company can repair mistakes on a credit report and have a score increased in just a few short months. I have seen customers raise their score over 80 points in less than 60 days. That was the difference between getting a loan and not getting one.

The moral of the story is that it IS tough and the average person's credit is poor these days. As a mortgage professional I would highly recommend letting a professional get involved and help fix the problem.......you will look back and absolutely know it was one of the best decisions you ever made. By doing that you will have opened doors that otherwise would have remained closed.

To learn more about how credit laws work and credit repair can assist you or someone you know, check out our credit repair section.