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Credit History Credit Scoring Lenders Require a Three bureau merged Report – Experian, Trans Union, Equifax Alternative Credit – Rental History Credit.

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Presentation on theme: "Credit History Credit Scoring Lenders Require a Three bureau merged Report – Experian, Trans Union, Equifax Alternative Credit – Rental History Credit."— Presentation transcript:

1 Credit History Credit Scoring Lenders Require a Three bureau merged Report – Experian, Trans Union, Equifax Alternative Credit – Rental History Credit Standards

2 Understanding Credit Credit Scores –Under 585=Low – = Normal –700 & up =High Credit History Collections / Judgments / Inquiries Correcting Reporting Errors Know Your Rights

3 Maximizing Affordability Debt Reconstruction –Auto Loans: Reduce Rate and/or extend them –Consolidate Credit Card Debt Student Loans –Extend them up to 25 years Explore Financing options –Fixed Rate vs. Adjustable Rate Mortgages (ARM) Consider other Income Sources

4 Ratios and Your Qualifications Ratios are guidelines Lenders use in determining what you can qualify for Ratios vary based on Loan Programs Front Ratio – Your Total house payment divided by your gross monthly income – usually 28% - 38% Back Ratio – Your Total house payment and revolving or installment debt divided by your gross monthly income – usually no more than 38% - 45% *Installment debt with less than 10 months remaining until they are paid off DON’T COUNT!! Example --

5 PITI (Your Total Monthly Payment) “P” stands for “Principal” – the portion of your payment that goes to reducing the loan balance “I” stands for “Interest” – that portion of your payment that is interest “T” stands for “Taxes” – 1/12 th of your annual property tax (prepaid) payment goes into your reserve account so the lender can pay your property taxes when they are due. “I” stands for “Insurance” – 1/12 th of your annual insurance (prepaid) bill goes into your reserve account so the lender can pay your hazard insurance when it is due “MI” stands for “Mortgage Insurance” – Required by law if you finance more than 80% of the value of your home. Protects the lender if you default.


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