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Credit Report Repair Increases With Self Employed Borrowers
The mentioned loans are available in this real estate market, however they are not 100% available, but at most 90-95%. Until lenders can properly assess risk again, this is what we have to do. Along with the recent reduction in loan o value offered, one must have a high credit score to qualify. Gone are the days of earning 100% financing with a 600 score. Now it is very common to have a qualifying credit score of up to 680 on the mentioned loan.
With the ever-changing need to shop around and refinance borrowers, the process still needs to be streamlined for our clients, so we can be more resourceful as mortgage brokers. Every mortgage broker, through their credit reporting agency, must have access to a credit analyst and also a quick re-score mechanism to help their clients qualify for the loans mentioned in this chapter.
For example, a cable satellite installer comes into my office and wants to buy a house with his fiancee. All of his income is 1099 and he is contracted with various employers. He has too many deductions, and he can’t prove his $50,000 a year income. It’s a prescribed loan, and we run her credit to find she has 650 points. We need 680. Many mortgage brokers will automatically refer this client to a credit repair company, which can take months to do anything other than charge the client a higher monthly fee. Avoid this option and only use it as a last resort. The bottom line is that the client won’t make a purchase for 12 months and putting him into credit repair will work organically over time. However, in this case, our borrower wants to make a purchase in the next 30 days, and needs a 30 point increase in his credit repair. what do you do
Every good credit reporting agency will have built-in features to help boost your client’s credit score. The first is the credit analyst. It will cost about $7 to run, however if done correctly will save your creditors hundreds of additional dollars. Basically you plug the target score, in this case, 680, into the system for the borrower. The analyst will then run the system, and tell you exactly what you need to do to get that score up to 680.
For example, he has a Capital One card with a $2000 limit and owes $2000. If we reduce the loan amount by 35% to limit the balance to $700, his score will gain an additional 30 points. Engine said that the revolving credit will be extended and this makes it look more insolvent. My borrower has to pay Capital One $1300 and then get a letter from Capital One stating the new balance. If done organically, this process can take up to 90 days, as creditors take their time updating with credit bureaus. This letter is proof for me to use for fast rescore submission.
Mortgage brokers, such as TransUnion, Eqifax and Experian, will typically take the letter with a bureau fee of $30, in this case $90. We submit this with our letter or to the credit reporting agency, who will update it with the bureau within 5 business days.
You just put your client on hold for extra months, so they can move into their home in 30 days. Being resourceful as a mortgage broker in this market is invaluable.
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