YOUR CREDIT AND YOU

It has been a while since my last post and now that I have had time to digest all the new information available I will be posting on a weekly basis.  Alot has changed in the real estate world and the most important item on the agenda is you and your credit.  I just came across a Borrower we will call Charlie.  Charlie was a middle aged man with a good business and had owned homes prior to our current transaction and had a perfect credit score.... or so he thought.  We went through the application process where Charlie has assured me that his credit would be fine and that he wanted to start looking for a home right away.  Well, Charlie was very shocked to find out that he did not have a good score, in fact, he had NO score.  When Charlie's credit came back his profile indicated an entry of N/A for his credit score.  The reason for this?  Charlie had paid off all his debt.  He had paid his current home off and it was free and clear of any mortgage.  He had paid all of his vehicles off including those he used in his business.  He had paid off all his credit cards and allowed the accounts to close.  You would think through all this that Charlie having paid off his Fannie Mae home loan and a vehicle worth over $50,000.00 would have an excellent score.  This is one of the changes that now exists in the wonderful world of the credit bureaus.  Mystery solved.  Charlie had failed to carry a balance for the last six months leading up to his new home purchase.  With the new guidelines being used by Experian, Trans Union and Equifax you as a consumer, in order to keep a credit score must now KEEP CREDIT!  We were able to remedy Charlie's credit score and brought him back up to a 755 but it took 30 days and alot of effort.  The lesson here is to be prepared.  Prequalification for a mortgage depends on your credit score and there are very few investors out there who will take a borrower without a credit score.  It can be done but it is more expensive and alot of work.  If you are interested in reviewing your situation I am always available.  Call me anytime!  Take a lesson from Charlie and always be prepared and never ever assume anything in this market!