Straight Talk About Bad Credit

Many of our customers for one reason or another have incurred some imperfect credit, ranging from a few late payments to bankruptcy or foreclosure.   This does not always prevent you from obtaining a home loan but there are trade-offs.   These trade-offs usually mean a slightly higher down payment and interest rate on your mortgage.

A new mortgage is the first step in reclaiming a good credit standing.   Unlike many Conventional or Government loans, Non-Conventional loans in most cases do not require Mortgage Insurance.   This can greatly affect the bottom line (total monthly payment) in a very positive way.

The Jensen Team will do a fee analysis to determine your credit grade, your required down payment and interest rate estimates.   We can also assist you with "mortgage counseling" to advise you how to repair and rebuild your credit.

An important point to remember is that if you do a non-conforming loan we can refinance that loan to a lower "market-rate" loan, usually within two years, providing your mortgage payments and other payments to all creditors have been paid as agreed.   In addition to rebuilding your credit, those mortgage payments for that 2 year period (all tax deductible) are providing you with a substantial tax break.

So contact us today to see how we can help you with your individual circumstances.

How to Dispute Credit Report Errors

Your credit report, a type of consumer report, contains information about where you work and live and how you pay your bills.   It also may show whether you've been sued, arrested, or have filed for bankruptcy.   Companies called consumer-reporting agencies (CRAs) or credit bureaus compile and sell your credit report to businesses.   Because businesses use this information to evaluate your applications for credit, insurance, employment, and other purposes allowed by the Fair Credit Reporting Act (FCRA), it's important that the information in you report is complete and accurate.

Some financial advisors suggest that you periodically review your credit report for inaccuracies or omissions.   This could be especially important if you're considering making a major purchase, such as buying a home.   Checking in advance on the accuracy of information in your credit file could speed the credit-granting process.

Getting Your Credit Report

If you've been denied credit, insurance or employment because of information supplied by a CRA, the FCRA says the company you applied to must give you the CRA's name, address, and telephone number.   If you contact the agency for a copy of your report within 60 days of receiving a denial notice, the report is free.   In addition, you're entitled to one free copy of your report a year if you can prove that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud.   Otherwise, a CRA may charge you up to $8 for a copy of your report.

If you simply want a copy of your report, call the CRA's listed in the Yellow Pages under "credit" or "credit rating and reporting."   Call each credit bureau listed since more than one agency may have a file on you, some with different information.   The three major national credit bureaus are:

Equifax PO Box 740241 Atlanta, GA 30374-0241 (800) 685-1111

Experian (formerly TRW) PO Box 949 Allen, TX 75013 (800) 682-7654

Trans Union 760 West Sproul Road PO Box 390 Springfield, PA 19064-0390

Correcting Errors

Under the FCRA, both the CRA and the organization that provided the information to the CRA, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report.   To protect all your rights under the law, contact both the CRA and the information provider.

First, tell the CRA in writing what information you believe is inaccurate.   Include copied (NOT original) of documents that support address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request deletion or correction. Click here for sample Dispute Letter.  You may want to enclose a copy of your report with the items in questions circled.   Your letter may look something like the sample below.   Send your letter by certified mail, return receipt requested, so you can document what the CRA received.   Keep copied of your dispute letter and enclosures.  

CRA's must reinvestigate the items in question-usually within 30 days-unless they consider your dispute frivolous.   They also must forward all relevant data you provide about the dispute to the information provider.   After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA.   If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRA's so they can correct this information in your file.

When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change.   If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.

Also, if you request, the CRA must send notices of corrections to anyone who received your report in the past six months.   Job applicants can have a corrected copy of their report sent to anyone who received a copy during the past two years for employment purposes.   If a reinvestigation does not resolve your dispute, ask the CRA to include your statement of the dispute in your file and in future reports.

Second, in addition to writing to the CRA, tell the creditor other information provider in writing that you dispute an item.   Again include copies (NOT originals) of documents that support your position.   Many providers specify an address for disputes.   If the provider then reports the item to any CRA, it must include a notice of your dispute.   In addition, if you are correct-that is, if the disputed information is not accurate-the information provider may not use it again.

Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal.   Accurate negative information can generally stay on your report for 7 years.   There are certain exceptions:

Adding Accounts to Your File

Your credit file may not reflect all your credit accounts.   Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to CRA:   Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those creditors that don't.

If you've been told you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, ask the CRA to add this information to future reports.   Although they are not required to do so, many CRA's will add verifiable accounts for a fee.   You should, however, understand that if these creditors do not report to the CRA on a regular basis, these added items will not be updated in your file.

For More Information

Contact:
Consumer Response Center
Federal Trade Commission
Washington, D.C. 20580
92020 326-2222; TDD (202) 326-2502

Click here for sample Dispute Letter