Credit rescoring helped one homeowner raise his credit score more than 100 points.

He also lowered his interest 2%, enabled him to get cash out to pay down credit cards and saved him $400 on his monthly mortgage payment. Can credit rescoring help you, too?

Many homeowners are anxiously seeking refinancing to escape high payments and scaling adjustable rate mortgages but get stopped cold by credit issues. Although mortgages are available at historically low interest rates, lenders have raised their credit criteria, making it difficult or nearly impossible for many homeowners to escape from potentially devastating financial situations. Credit scores are determined by credit bureaus based on payment history and outstanding debt, and these scores help determine whether a homeowner can qualify for a mortgage and the interest rate they will pay. Time after time, credit reports present incomplete or erroneous information that can make refinance difficult or impossible. Most homeowners don’t realize that they may be able to clean up and rescore their credit to qualify for refinancing with a low-rate loan, and even get cash out for added security in today’s uncertain times.

Credit Rescoring Made the Difference for This Family

With costs of food and fuel on the rise, Tennessee homeowner Bobby Stuard looked into refinancing to lower his monthly payment, but several mortgage companies didn’t return his call. When he responded to a mailing from Residential Finance Corp., a mortgage lender that specializes in FHA refinance loans, Senior Loan Officer Jeff Ortman took his call. “When I went over Bobby’s credit report, I noticed that there were some late payments. He was surprised because they actually belonged to a family member in the military who had a few late payments while away at boot camp.”

“When we first spoke, Jeff said he could help me refinance at a better rate, even with the credit issues,” says Bobby Stuard. “But once he discovered that the late payments recorded on my credit report weren’t mine, he instructed me on how to get those payments removed from my credit report. Jeff’s advice helped me boost my credit score more than one hundred points.”

“By rescoring Bobby’s credit, I was able to get his interest rate down 2 more points to 5.75 percent and provide him with options to take cash out to pay down credit cards and still lower his payment by $400 per month,” says Jeff. “Most people don’t realize that knowledgeable mortgage professionals can often help homeowners raise their credit score to qualify for more favorable financing terms and options. Often people don’t watch their credit reports closely and are shocked to learn that these scores can make it hard or even impossible to refinance in today’s market. But with interest rates so low, this is the time that homeowners could lock in a far lower rate and save thousands.”

“In just a few weeks, Jeff helped me update my credit report and complete my refinance at a far lower rate, and he cut my monthly payment by $400,” adds Stuard. “Taking equity out meant that I could pay off bills and help my credit even more.”

Clean Up and Manage Your Credit – Tips for Homeowners Seeking Refinance

Everyone should take a good look at their credit report on a regular basis, cautions Ortman. “Many times information reported by the credit bureaus may not be completely accurate. Late payments, outstanding debts and discrepancies drag down credit scores. Even the smallest discrepancy or outstanding debt can negatively affect your credit, lower your score and potentially kill your ability to refinance. Before applying for refinancing, we recommend that homeowners review their credit and take steps to repair it wherever possible.”

• Order copies of your credit report from all three bureaus and check carefully for errors and discrepancies across all three reports.

• Always pay your bills on time because late payments lower credit scores. If you have a very few late payments and you can document legitimate reasons why, you may be able to petition to get the late payment removed from your credit report.

• Do you have any outstanding bills that were disputed and never resolved? An unpaid bill, no matter how small, can give your good credit a black eye and make it hard to qualify for refinance. For instance, if your contractor never finished the job and you didn’t pay their last bill, they may have reported you. You need to contact the credit bureau and document your reason for non-payment, and be ready to work out a resolution in order to rebuild your credit.

• Never max out your credit cards. Keeping your debt consistently higher than thirty-percent of your credit limit negatively impacts your credit and lowers your credit score.

• Your home equity line of credit (HELOC) is considered a revolving credit debt. Don’t rely on HELOC for long-term debt. Keeping your balance high and paying the minimum amount due can drag your credit score down.

• If you’ve missed the due date on a bill, pay it as soon as you can. Don’t wait until next month and double up your payment when you get the next bill because your payment will be 30-days past due and can be reported to the credit bureau to lower your credit score. Very few consumers understand how important it is to pay bills within 30 days to keep their credit intact.

“Even homeowners with credit problems can take steps to upgrade their credit scores and increase their chances of qualifying for refinance,” added Ortman. “Bobby’s story is a great example. We are trained to ask questions and listen carefully to people’s answers. The mortgage industry is changing rapidly, but Residential Finance continuously trains and updates us on mortgage industry regulations, trends, options and techniques, such as credit rescoring. When I took Bobby’s call, I quickly realized that we might be able do a credit rescore to help him get more favorable financing. It’s a great feeling when you know you can help someone over the long term like that.”

“The other lenders didn’t return my calls, but Jeff Ortman asked a lot of questions and took the time to listen to me and he helped me fix my credit,” said Stuard. “Everyone should check their credit on a regular basis and make sure there aren’t any discrepancies, especially if you’re refinancing. And for people who are struggling with their bills and are worried about losing their homes, they should speak with a mortgage professional like Jeff who will look into their situation and see if a credit rescore can help.”

Related posts:

1. Can File Segregation Boost Your Credit Score?

Tagged as: bad credit, Credit, Credit Bureau, credit report, Credit Rescore, credit score, home loan, Mortgage, Refinance

Be sure to check out the latest bank rates, cd rates, mortgage rates and top deals on RateNerd.