grannyguru 0 Report post Posted June 30, 2004 Does cleaning up a credit report actually lower the credit score? A potential buyer who removed 3 negative (and incorrect) credit items from her credit report saw her score fall, and was then told by an investor I referred her to that nowadays there is something like 10 points per removal taken off the credit score. Does Andrew or any lender out there know if this is true? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 30, 2004 I have never heard that one before. But, maybe someone else will come along with a different perspective/experience on this. Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted June 30, 2004 Hi Alice, Hmm....that is strange! I've never heard of that either. Last week I called Far West Credit (credit report provider) on a client that had a tax lien showing on his report. The rep phoned Multnomah County auditors and found out the client did not owe the amount to the county as shown on the credit report. Within 48 hours I and Far West had this removed but the scores were not affected, but with the removal of this lien, the clients report looks much better. The credit bureaus will adjust scores every month so this clients scores should go higher by the 10th of July. Keep us posted with all this. I'd be interested to hear more on your client. Andrew Share this post Link to post Share on other sites
Mr Saint 0 Report post Posted July 1, 2004 I too have never heard of such a thing. In fact it seems that the credit bureaus are heading the other direction. I just was told the other day that new laws inhibit a lowered score as a result of credit counseling services now. Interesting. Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted July 1, 2004 Indeed Mr. Saint, The reason for the reduction in score for credit counceling is because the bureaus are punishing people for not handling their money properly. In other words, people who go for help are weak therefore the reduction of scores. One would think this would be a good idea if someone is sinking financially but the bureaus obviously have different ideas on all this. Interesting indeed! Share this post Link to post Share on other sites
grannyguru 0 Report post Posted July 1, 2004 Thanks all for the input. I bet it's not true because I think if it was Andrew or someone else here would know about it. I had never heard of it and just thought maybe someone here had. I'll post whatever I find out about this. Thanks, Alice Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted July 1, 2004 Alice, No problem, always happy to help where I can. Umm...have you by chance seen the potential buyers credit reports both before and after the derogatory credit items were removed? I have no idea why they would reduce scores for improving and cleaning up a report. If anything, it should ADD 10 points not subtract. Again, keep us posted as I'm interested in zeroing in on this scenario. My guess is that the potential buyer must have had some other negative issues appear on the credit report? I dont know.... Thanks, Andrew Share this post Link to post Share on other sites
Golflover 0 Report post Posted July 1, 2004 Andrew, What would you say is the lowest credit score a person could go into a bank and ask for a loan to purchase real estate? At times i feel it would be easier if we owned the property and just L/P to someone. It would cut out on the marketing for a seller and if we did find a motivated seller in the process, more power to us. I wouldnt know how easy/tough it is to find a buyer, im still having troubles finding the seller Share this post Link to post Share on other sites
lacashman 0 Report post Posted July 1, 2004 What would you say is the lowest credit score a person could go into a bank and ask for a loan to purchase real estate? This would depend upon the bank. I worked with one bank that did not have a min credit score. They would pull the credit file but were not concerned with the score. They often do deals with scores below 400. They wanted a good explanation of what went wrong and if the situation had been corrected. If they were happy with the answer and the buyer had 30% to put down they would look at the deal. Share this post Link to post Share on other sites
Golflover 0 Report post Posted July 2, 2004 Thanks for the response, I've heard of that before, they called it the 30/70 rule. If you have 30% to put down, almost anyone will do a deal with you. The reasoning behind this is, if you put 30% down, most people wouldnt walk away with this kind of equity/down payment in the property Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted July 2, 2004 Golflover, To the best of my knowledge, there are a couple lenders that will do 100% with a 580 FICO score. Of course, you can get financing with lower scores but just not at 100%. Banks? Forget it! They are "A" paper pushers and want to see people in the high 600's and up. (At least for decent rates and terms). Non-conforming lenders will go the lower route but also there are higher rates and terms. You are absolutely right that the banks want some downpayment as security for the borrower not running away. They believe that a person who will put money down is more serious than a borrower with no money. Share this post Link to post Share on other sites
Golflover 0 Report post Posted July 2, 2004 Andrew, Does it matter with banks or mortgage companies if the property is being used for investing or as a homestead? A few years ago while reading the rich dad books, he made it seem like all you had to do was walk into a bank and tell them your an investor and they would throw money at you so you could invest in real estate. The only problem with the FICO score is, the more people look at your credit report, the lower your score goes, which i think is pretty goofy in itself Share this post Link to post Share on other sites
lacashman 0 Report post Posted July 2, 2004 Banks? Forget it! They are "A" paper pushers and want to see people in the high 600's and up. (At least for decent rates and terms). Some of the most flexible lenders that I know of are banks. But walking into the branch office is not the way to find these products. Most are only offered on the wholesale side. Share this post Link to post Share on other sites
lacashman 0 Report post Posted July 2, 2004 Does it matter with banks or mortgage companies if the property is being used for investing or as a homestead? Yes. Usually on Non Owner Occupied loans you will find it requires a higher down payment for the same FICO score. Rates are also better for OO loans. Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted July 3, 2004 Lacashman, Thanks for pointing that out. From my experience, when we get rate sheets from banks, they offer great rates but when I look at the terms and guidelines, what I've seen is that they are wanting borrowers with a clean history and high FICO scores. Personally, I've never closed a loan with a bank. I've ran some applications past them but usually got shot down pronto, hence, my uncertainty about using them. Earlier this week, a seller of an apartment complex in TX gave me the idea to go to local small banks as he got his complex for a dime and a song and said the banks there were good on rates and terms. Earlier today I contacted the lender on the seller's property at Moses Lake, WA and will try to discuss obtaining financing through them. I'll keep you all posted on this. Thanks again for opening my eyes wider on this topic. Andrew Share this post Link to post Share on other sites