SayEducate

One of the keys to having a strong credit record is your credit score, the number the three major consumer credit reporting agencies develop to help lenders decide whether you will receive credit, for how long (your term), and the interest rate that you will pay. The higher your score, the more likely you’ll be approved for a loan and at a competitive rate.

Experian, TransUnion, and Equifax are the three private agencies who track your credit and each one “scores” you based on the financial information that they have about you. Thus, each one will likely return numbers that are different from the other two, but their scores should be in the same ballpark.

Your credit score is also called your FICO score which stands for Fair Isaac Corporation score, a formula developed by Fair Isaac and used by all three credit reporting agencies.

If you are looking to buy a home and are seeking to finance it for 30 years, taking out a $300,000 loan then the most recent FICO numbers would give you the following loan details:

These are national averages, so your loan will look slightly different where you live. As you can see, the $950 per month premium for the person with a score in the low 500s, would add more than $10,000 annually to the loan, that is if they can get approved in the first place.

So, what can you do to raise your score? It can’t be changed overnight, but if your score is too low you can do the following which should yield decent results within 3-4 months time:

Clean up your credit report — that’s right, if there are errors on your report your score could be artificially low. Start off by checking your report first for accuracy before proceeding.

Pay on time — late payments can weigh you down, therefore make sure that you pay every bill on time.

Pay down debt — you don’t have to pay off all of your debt, but if your percentage of debt as related to credit line is over 35%, then that will lower your score.

Clean up an old mess — that unpaid and uncollected money you owe from long ago could be biting you in the backside. Contact creditors and offer to pay at least a portion of what you owe to settle your debt once and for all.

As always, check your credit regularly by ordering a credit report and your credit scores to see where you stand. Obtaining both is a small investment which can pay near instant dividends.

The topic of Identity Theft continues to surface regularly on the news, around the workplace water cooler, and in homes where consumers are trying to figure out the best way to respond when their social security numbers have been stolen, credit cards opened up in their names, and other unauthorized activity taken place. I.D. Theft isn’t merely an inconvenience, it is a problem that can cause much misery for the afflicted consumer.

If you suspect or know that you have been victimized, there are some steps you can take to defend yourself. Thanks to recommendations made by the Federal Trade Commission (FTC), there are four steps you can take to win your battle against identity theft:

1 Review your credit reports, have alerts placed in your files. You are entitled to receive one free copy annually of your credit report from the three major credit reporting bureaus. If you suspect that your identity has been stolen, then obtain copies from TransUnion, Equifax, and Experian. If you instruct one company to place a fraud alert in your file, they are required to inform the other two that an alert has been placed. Visit AnnualCreditReport to obtain your free credit reports.

2. Close tampered or fake accounts. Any credit accounts you opened should be closed as well as accounts not opened by you, but in your name. You’ll need to contact the fraud departments of each business and there are steps on the FTC site instructing you how to do this.

3. File a complaint with the FTC. By notifying the FTC of I.D. Theft, you can help this agency track theft trends which are shared with law enforcement people across the country.

4. File a police report. Notify your local police or the police in the locality where the theft took place. Some locales may be hesitant to take your report, while others may be required to do so under state law. In some states, notifying the state police is the best approach.

Once that you have identified that you are a victim of I.D. theft, taking immediate action is necessary. The longer that you wait, the worse the problem can become.

Further Reading And Resources

Credit Management Center

Defend: Recover From Identity Theft

Free Credit Reports

Most certainly, the national real estate landscape has quieted, with home prices and sales down over the past year. Even with the reduced mortgage rates, many people will find it difficult to secure a home loan.

Consumers who are locked out of the housing market can still get in with a little creativity on their parts. By leasing a home with an option to purchase the property within a specified period of time, home ownership could be within reach.

A lease option is a terrific way for people to get into the home they want right now and live in it as a tenant. Then, at some point within the option period, usually one to three years, renters can “opt” to purchase the home for a predetermined price.

What you should know about a lease option:

• Lease options are typically for a one to three year period. If you want the home during that time, you can opt to buy it or walk away and allow the landlord to sell it to someone else.

• You’ll be expected to pay an option deposit which will be applied to your purchase. In addition, you may be charged an amount over and above your monthly rent money which coupled with the deposit be applied to your home’s purchase.

• If you decide that you don’t like the home, you can walk away from it without obligation to purchase it. Depending on the terms of the agreement, you may or may not get the deposit and extra monthly payment monies back.

• A lease option allows you to accumulate money which will act as the down payment for your home. Many consumers find that coming up with thousands of dollars for a down payment is impossible. The accrued funds will act as your down payment.

Of course, you must have good credit in order to qualify for a mortgage once you exercise your lease option. Make sure that your credit reports are clean and your credit score is good enough to qualify for a loan. See a mortgage professional to get pre-qualified for a loan before exercising your option.

A lease option serves as a method of forced savings of sorts, money you’ll come up with on a monthly basis which will be added to your down payment. Not every seller will agree to this option, but in a slow market presenting a lease option could be one way that a seller gets out from underneath his property, but one to three years later.