Credit and Credit Management:
Reasons to Pay Attention
It's not hard to find advice on a full-range of credit issues today ...
Experts (or so called experts) are everywhere. I find that most of my clients understand that credit scores are very important ... and growing more so.
I've found that: Poor credit scores are typically not the result of overspending by itself. Rather, it's a lack of understanding of how spending, payment/non-payment of financial obligations reflect on their credit report (and when those become reflected) that caused issues.
This leads me to believe: Courses addressing credit and credit management are needed (and by that, I mean should be mandatory) in ALL high schools.
These courses should be offered prior to a child heading-off to college or entering the adult world. Prior to a time when they can start doing damage to their credit standing. How to establish, then maintain a proper credit score should be the focus of these classes.
Here's how "not knowing" how to manage credit adversely affected two hopeful Borrowers:
In one case, my Borrower had several "bruises" on his credit, including a prior income tax lien. While my client had paid and satisfied the debt (done through garnishment of his wages via his paycheck) and there was no longer a balance owed, neither the IRS or the client had notified the Credit Bureaus, those being Experian, TransUnion, and Equifax, of that fact.
In the second example, a judgment had been court ordered against my client. A public filing, again resulting in a wage garnishment, had been enacted. Once again, the debt had been fulfilled in its entirety without any of the participating parties reporting it to the 3 Credit Bureaus.
In both cases, the debts still appeared as though still owed, according to the "known" status of the account. Since judgments and liens must be paid in full ... AND require an actual written "Release" be issued and recorded by the local court jurisdiction (typically the County Recorder or Clerk of the Circuit Court), a very integral part of the repayment process was missed.
In both instances, my Borrowers argued that it was someone elses responsibility to have seen that the "Release" was filed and recorded. And there may have been some truth to their argument.
But the bottomline is:
No one is more affected than the client if the Release is not recorded.
So ultimately? It's the Borrower's responsibility to see that their account status is correctly updated.
It should also be pointed out that in both cases, the Borrowers did not know that their Releases had not been recorded. When I discovered it, time was then lost to clearing each lien/judgment so mortgage processing and purchases could proceed.
So be aware: The wheels of credit and credit repair do not turn quickly. Valuable time is lost while searching for past documentation, older statements, or proofs of payment.
Often, a Letter of Explanation must be written by the Borrower addressing circumstances showing on Credit Reports. Reviews and updates must be made by the Credit Bureaus. All this ends-up taking place during contract time constraints and under stressful situations.
Remaining educated, paying attention, seeing to details, taking charge of your own finances, credit, and credit management ... are positive and proactive actions that every adult should take. That's true whether hoping to buy a home or not.
The best management, best pro-active action can be taken relatively quickly and simply by running your credit report at minimum, on an annual basis. To accomplish that, go to www.annualcreditreport.com for your free annual credit report. Or contact me, should you be hoping to buy or refinance a Chicagoland (or WI) home.
Credit and Credit Management: Reasons to Pay Attention. If these two issues became "non-issues", the number of mortgage approvals would rise dramatically.
* Hoping to Buy, Build, or Refinance a Home? Contact me today! I'll put my 37 years of mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Gene Mundt, Mortgage Lender, a Lender with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago/Greater Chicagoland region, including:
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL.
Your Referrals are Greatly Appreciated!