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    7 Ways To Improve Your Credit Score

    4/29/2016

    2 Comments

     
    Improve Your Credit Score
    Need to boost your credit score?
    Unfortunately, a credit score isn't like a race car, where you can rev the engine and almost instantly feel the result.

    Credit scores are more like your driving record: They take into account years of past behavior, not just your present actions.
    In addition to making the right moves, you also have to be consistent. A few easy steps can push your score in the right direction.
    7 steps to improve your credit score:
    • Watch those credit card balances
    • Eliminate credit card balances
    • Leave old debt on your report
    • Use your calendar
    • Pay bills on time
    • Don't hint at risk
    • Don't obsess

    Watch those credit card balances

    One of the major factors in your credit score is how much revolving credit you have versus how much you're actually using. The smaller that percentage is, the better it is for your credit rating.

    The optimum: 30 percent or lower.

    To boost your score, "pay down your balances, and keep those balances low," says Pamela Banks, senior policy counsel for Consumers Union.

    What you might not know: Even if you pay balances in full every month, you still could have a higher utilization ratio than you'd expect. That's because some issuers use the balance on your statement as the one reported to the bureau. Even if you're paying balances in full every month, your credit score will still consider your monthly balances.

    One strategy: See if the credit card issuer will accept multiple payments throughout the month.

    Eliminate credit card balances

    "A good way to improve your credit score is to eliminate nuisance balances," says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.

    The reason this strategy can help your score: One of the items your score considers is just how many of your cards have balances, says Ulzheimer. So, charging $50 on one card and $30 on another, instead of using the same card (preferably one with a good interest rate), can hurt your credit score, he says.

    The solution to improve your credit score: Gather up all those credit cards on which you have small balances and pay them off, Ulzheimer says. Then select one or two go-to cards that you can use for everything. "That way, you're not polluting your credit report with a lot of balances," he says.

    Leave old debt on your report

    Some people erroneously believe that old debt on their credit report is bad, says Ulzheimer. The minute they get their home or car paid off, they're on the phone trying to get it removed from their credit report, he says.

    Negative items are bad for your credit score, and most of them will disappear from your report after seven years. However, "arguing to get old accounts off your credit report just because they're paid is a bad idea," he says. Good debt -- debt that you've handled well and paid as agreed -- is good for your credit. The longer your history of good debt is, the better it is for your score. 

    One of the ways to improve your credit score: Leave old debt and good accounts on as long as possible, says Ulzheimer. This is also a good reason not to close old accounts where you've had a solid repayment record.

    Trying to get rid of old good debt is "like making straight A's in high school and trying to expunge the record 20 years later," Ulzheimer says. "You never want that stuff to come off your history."

    Use your calendar

    If you're shopping for a home, car or student loan, it pays to do your rate shopping within a short time span.
    Every time you apply for credit, it can cause a small dip in your credit score that lasts a year. That's because if someone is making multiple applications for credit, it usually means he or she wants to use more credit.

    However, with three kinds of loans -- mortgage, auto and more recently, student loans -- scoring formulas allow for the fact that you'll make multiple applications but take out only one loan. The FICO score, a credit score commonly used by lenders, ignores any such inquiries made in the 30 days prior to scoring. If it finds some that are older than 30 days, it will count those made within a typical shopping period as just one inquiry.

    The length of that shopping period depends on the credit score used.

    If lenders are using the newest forms of scoring software, then you have 45 days, says Ulzheimer. With older forms, you need to keep it to 14 days. Older forms of the software won't count multiple student loan inquiries as one, no matter how close together you make applications, he says. "The takeaway is don't dillydally," Ulzheimer says.

    Pay bills on time

    If you're planning a big purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash. While you're juggling bills, you don't want to start sending bills late. Even if you're sitting on a pile of savings, a drop in your score could scuttle that dream deal.

    One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.
    "Credit scores are determined by what's in your credit report," says Linda Sherry, director of national priorities for Consumer Action. If you're bad about paying your bills -- or paying them on time -- it damages your credit and hurts your credit score, she says.

    That can even extend to items that aren't normally associated with credit reporting, such as library books, she says. That's because even if the original "creditor," such as the library, doesn't report to the bureaus, they may eventually call in a collections agency for an unpaid bill. That agency could very well list the item on your credit report.

    Saving money for a big purchase is smart. Just don't slight the regular bills -- or pay them late -- to do it.

    Don't hint at risk

    Sometimes one of the best ways to improve your credit score is to not do something that could sink it.
    Two of the biggies are missing payments and suddenly paying less (or charging more) than you normally do, says Dave Jones, retired president of the Association of Independent Consumer Credit Counseling Agencies.

    Other changes that could scare your card issuer but not necessarily dent your credit score: taking out cash advances or even using your cards at businesses that could indicate current or future money stress, such as a pawnshop or a divorce attorney, he says.

    "You just don't want to do anything that would indicate risk," says Jones.

    Don't obsess

    You should be laser-focused on your credit score when you know you'll soon need credit. In the interim, take care of your bills and use credit responsibly. Your score will reflect these smart spending behaviors.
    Are you getting ready to make a big purchase, such as a home or car? At least a few months in advance, spring for a copy of your credit scores, Sherry says.

    While the score you can buy may not be the exact same one your lender uses, it will grade you on many of the same criteria and give you a good indication of how well you're managing your credit, she says. It will provide you with specific ways to improve your credit score -- in the form of several codes or factors that kept your score from being higher.

    If you are denied credit (or don't qualify for the lender's best rate), the lender has to show you the credit score it used, thanks to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    Another smart move: Regularly keep up with your credit report, says Sherry. You're entitled to one of each of your three credit bureau reports (Equifax, Experian and TransUnion) for free every 12 months through AnnualCreditReport.com.

    Smart consumer tip: Stagger them, Sherry says. Send for one every four months, and you can monitor your credit for free.

    From: Bank Rate
    2 Comments

    Buying a Home When Inventory Is Tight

    4/15/2016

    1 Comment

     
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    It can be tough to buy an affordable home in a great area, especially when everyone else is looking as well, causing the inventory of available homes to be competitive. In some areas, even homes in not so great areas are hard to come by. With the increase in population and the rising rents causing people to consider a mortgage, it’s getting more difficult to buy a house. Don’t buy that RV yet! There are ways to get a good home for a good price.

    How Tight Is Inventory
    Existing home sales fell in February, down 7.1% from 2015. The median existing-home price for all housing types in February was $210,800, up 4.4 percent from February 2015 ($201,900).

    Zillow is also reporting that home sales are currently flat. Nationwide home values rose 4.3 percent year-over-year to a Zillow Home Value Index of $184,600.
    Of course it depends upon where you live, and where you want to buy.

    What to Do First
    • ​Do yourself a favor and get pre-approved with a reputable loan officer. That way, you’ll know exactly how much you can afford when you place your offers, and you will be a stronger candidate since you already have financing.
    • Clean up your credit report and keep it clean. Dispute any discrepancies and avoid opening any new lines of credit or inquiries. Your report will be checked during closing, you want to avoid any last minute score drops.
    • Make your best offer up front as you may not get another chance.
    • Keep your list of “must haves” and “nice to haves” up to date. You’ll see new things as you visit homes. That way, if a house hits all of your must-haves, you’ll be ready to make a good offer.
    • Be available for your real estate agent during negotiations. If the seller wants a fast answer and doesn’t get it, they may go to the next person on the list.

    Strategies for Purchasing:
    • If you are eager to buy and have found a home you really want, you make your offer as strong as possible. Your real estate agent should have some solid suggestions since they will know the area, and how much homes are selling for.
    • If you have time to shop around, you can be a bit more aggressive with a lower offer.
    • Another way to set yourself apart from other buyers' is to increase the amount of earnest money you put up with your offer. The money goes toward your down payment if your offer is accepted, and is returned to you if the seller declines your offer. You lose the money if you back out of the offer, so only do this on a home you really want.
    • Consider the type of mortgage you will use. A conventional mortgage may be more attractive to the seller. The requirements for the condition of the property are often stricter for FHA. loans, so some sellers may be wary of being asked to make repairs before the sale can proceed.
    • Limiting the number of contingencies in your offer regardless of whether they are related to financing, inspections or other conditions,will strengthen your offer.

    Zillow offers some online tools to find listings that you may not have thought of.
    1. Look for all expired or withdrawn over a longer period. Perhaps a house was overpriced at the time but would be competitive now.
    2. Use Zillow’s Make Me Move (R) tool to find a home.
    3. Evaluate rentals. Perhaps someone moved due to work or school and didn’t have time to sell their home, so they’re renting it out.
    4. If a home is overpriced, see how long it’s been on the market. After six weeks, there may be more negotiating room.
    5. Have your real estate agent look for “pocket” listings. These are private listings because, for whatever reason, the owner doesn’t want it put officially on the market. Maybe they don’t want to keep the house clean and empty for viewings. Either way, it could give you an edge over people only looking at MLS.


    From Here
    1 Comment

    10 Lethal Mistakes Investors Make

    4/14/2016

    1 Comment

     
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    ​Once the market starts to rebound, investing in real property also becomes a more appealing idea -- either as a career or a great side job. Like any other endeavor, though, there's a right way and a wrong way to go about it.
    Bankrate spoke with established, full-time real estate investors and with professionals, such as bankers, to identify the types of traps into which real estate investors most often fall.

    ​1. Planning as you go.  Andy Heller, an Atlanta-based investor and co-author of "Buy Even Lower: The Regular People's Guide to Real Estate Riches," says lack of a plan is the biggest mistake he sees new investors make. They buy a house because they think they got a good deal and then try to figure out what to do with it. That's working backward, Heller says. "First, you find the plan," he says. "Then you find the house to fit the plan. Pick your investment model, and then go find property to match that. Don't find the strategy after you find the home."

    The problem is that most people look at real estate as a transaction instead of as an investment strategy, says Doug Crowe, a Chicago-based real estate investor and speaker. "People fall in love with a property," says Crowe, who is managing director of Springboard Academy, the nation's only real estate academy for investors. "I say, 'Who cares about the property?' I fall in love with a motivated seller."

    The number is the number, and you don't go above that, he says. The best way to solve the problem is to have lots of activity and make offers on multiple properties. Then you don't care which one you get -- as long as the numbers work out in your favor.

    2. Thinking you'll "get rich quick." That kind of wrong-headed thinking is fueled by "these self-appointed gurus who have infomercials and make it sound so easy to get rich in real estate," says Eric Tyson, co-author of "Real Estate Investing for Dummies." It's not easy. It's a good long-term investment, but so is putting your money in a mutual fund, which is a lot easier. "These gurus don't talk about all that hard work. You have to be smart, you have to be willing to work, and you have to understand your risk tolerance."

    3. Playing Lone Ranger. A key to success is building the right team of professionals. At the very least, you need good relationships with at least one real estate agent, an appraiser, a home inspector, a closing attorney and a lender, both for your own deals and to assist with financing for prospective buyers.

    In the remodeling and maintenance segment of the business, the team includes a plumber, an electrician, a roofer, a painter, a heating and air conditioning, or HVAC, contractor, a flooring installer, a lawn maintenance service, a cleaning service and an all-around handyman. You can't build a business as an investor if you're spending all your time fixing leaky faucets and putting up ceiling fans.

    4. Paying too much. Heller says the biggest reason investors don't make money is simple: They pay too much for the properties. "The profit is locked in immediately once the investor buys the property," he says. "Due to mistakes in the analysis, the investor pays too much and then is surprised later when he doesn't make any money.

    5. Skipping homework. You wouldn't think you're qualified to perform open-heart surgery without years of education and training. Yet many wannabe real estate investors don't think twice about taking their financial lives in their hands without even cracking a book. Educate yourself before you put your family's financial security on the line. Read articles, check out books from the library and look for a local chapter of the National Real Estate Investors Association. Speakers at monthly meetings cover everything from buying foreclosures to screening tenants.

    If you can't find a local chapter, find out who owns a lot of rental properties in the area, call him up and offer to pay for an hour or two of his time to find out whether this is a good career for you.

    6. Ducking due diligence. Investors often have to move very quickly on their deals. That doesn't mean they sign a contract and write a check without plenty of research, though. That's where a lot of newbies trip up, says Houston-based real estate agent Laolu Davies-Yemitan. They don't do their due diligence about the deal, the costs or the market conditions, and they wind up draining their personal savings because the house needs extensive repairs or they can't sell it. "Sometimes, new investors are buying property just based on the idea that the property is going to appreciate," he says. "Usually, they don't have any information to substantiate that."

    7. Misjudging cash flow.If your strategy is to buy, hold and rent out properties, you need sufficient cash flow to cover maintenance. "People think they can get a property manager," Tyson says. But many have never interviewed a property manager and have little idea about how they work.

    Most managers, for example, are reluctant to take on one single-family home or a duplex, he says, preferring larger complexes, and fees of 7 percent to 10 percent of the monthly rent are common. "It's a huge expense," Tyson says. "I can put my money in a mutual fund and it costs a half-percent a year."
    Davies-Yemitan agrees. It's not uncommon for a property to sit on the Houston market for 90 to 120 days before it's leased, he says. Meanwhile the owner has to pay the mortgage, the taxes, the insurance, the cost of advertising and homeowner or condo association dues, he says. If the owner hasn't budgeted for that, an asset can quickly become a liability.

    8. Lowering the volume.If you're working on one deal at a time, Crowe says, you're doing transactions, not running a business. You need a steady pipeline of prospective deals; sufficient volume will weed out the marginal deals and let the good ones rise to the top.

    9. Painting yourself into a corner.Many people buy a property and get stuck with it because they only have one exit strategy. They're going to sell it or they're going to rent it out. What if it doesn't sell? What if the rental market stalls? Always have two, if not three, ways to get out of any deal. For example, if plan A is to rehab the house, put it on the market and resell it, then plan B could be to offer a lease-purchase to a buyer. Plan C might be to hold the house and rent it out. And as a plan D, there is the wholesale option, which would involve selling to another investor at a below-market price. Hopefully, you'll still make a profit, but at the very least, you'll cut the losses you're taking every month in carrying costs.

    10. Miscalculating estimates. Crowe tells his new rehabbers that after they've done their homework, they should double the amount of time and money they think it will take. If they can still make money then and they might be able to rent it out, it's a good deal.


    From: BankRate
    1 Comment

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