How much can you Borrow? The question everyone applying for a loan wants the answer to is “how much do I qualify for? Depending on your credit score & the amount of your revolving debt, a few home equity lenders may let you borrow up to 100% of the appraised value of your home. When you apply for a loan online, always ask the lender about the terms for the home equity loan. How many years is the loan for? Is the interest rate fixed or variable? If you are applying for a home equity line of credit, discuss whether or not there is a minimum draw requirement at closing.

Don’t forget to find out about the accessibility. In other words, how do you access to your credit line? (ie. checks, credit card, etc.?) Ask the loan officer if after the draw period expires, whether or not it will you may be able to renew your credit line. If you cannot, find out if the interest rate will continue to be variable for the repayment period. If there are fixed rate options, get them.

Verify with your loan officer that there is no balloon payment with the second mortgage. If there is, you may be required to pay off the entire outstanding balance, when the balloon payment is due.

How much cash can you get out of your home? If you have good credit, and have for example $75,000 in equity, you should be able access the entire $75,000. There are quite a few home equity lenders that offer equity loans up to 100% of the appraised value of your home. A few brokers and lenders, like BD Nationwide Mortgage can offer you second mortgages up to 125% of home’s appraised value. Typically 125% loans will have some cash out limits. Depending upon your credit score, 125% second mortgages will allow cash back between $25,000 and $75,000 in addition to the debt consolidation.

Dan Ambrose is a true mortgage authority who has been in the business for nearly 15 years. Today Dan is a free-lance writer, and account executive for Irwin Home Equity. He offers loan tips to anyone interested in maximizing home equity. Previously, Dan has done some consulting for Countrywide, and BD Nationwide Mortgage. You can read more of his articles about Second Mortgage & Home Equity Loans online. For a complete look at home equity loans please visit 2nd Mortgage & Debt Consolidation or go to 125 second mortgages online. If you want more tips, please check out the “FTC Fast Facts - Home Equity Credit Lines” published by the Federal Trade Commission.

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Your credit report is the information provided to the credit scoring system lenders use to determine their financial risk in granting you a home loan or home equity line of credit (HELOC). Credit bureaus, or consumer reporting agencies (CRAs), collect, package, and sell what is commonly known as your “credit report” or “credit profile” to companies seeking information about your financial matters. However, these reports can contain inaccurate, incomplete, outdated and sometimes even misleading information that can lower your credit score, also known as your FICO score, and can cause you to be denied a line of credit or debt consolidation loan, or to settle for a “bad credit” loan with high interest and poor terms.

There are hundreds of credit bureaus across the nation, but they are generally are affiliates of, or subscribers to, these three bureaus: Trans Union, Experian, and Equifax

What is a FICO score?

FICO is a credit scoring system developed by Fair Isaac & Co. According to myFICO.com, a division of Fair Isaac, you have three credit scores that range from 300 to 850, one for each of the three credit bureaus - Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you (credit reports). As this information changes, your FICO credit scores tend to change, as well.

How Can I Increase My FICO Score?

Increasing your credit score takes time. The following are ways you can work towards increasing your FICO credit score.

Pay your bills on time to raise your score. Late payments and collections lower it.

Do not apply for credit frequently. Having too many inquiries worsens your score.

Reduce your credit card balances. Being “maxed” out affects your FICO score negatively.

If you have limited credit, obtain additional credit. Not enough credit can negatively impact your score.

Get a copy of your credit reports from each of the above-listed CRAs and check them for accuracy. If any information is incorrect, dispute it, so it can be corrected. This is known as “repairing your credit.”

Isn’t Credit Repair Illegal?

Credit repair is only a concern when anyone tries to have accurately reported derogatory information illegally deleted from their credit reports. The Federal Trade Commission (FTC) states that both the consumer reporting agency and the information provider (company or organization that provides information about you to a CRA) are responsible for correcting inaccurate, incomplete or outdated information in your report under the Fair Credit Reporting Act (FCRA).

Disputing Items on Your Report

You can dispute inaccurate, incomplete or outdated items online, but the FTC suggests that you dispute them by mail. Include copies (NOT originals) of documents that support your position. Clearly identify each item you dispute, explain why you dispute it, and request that it be removed or corrected. You may want to enclose a copy of your report with the items circled. Send your letter by certified mail, “return receipt requested,” so you can document what the CRA receives. Keep copies of your dispute letter and enclosures.

You could also contact the information provider directly (in writing) to dispute the items. Be sure to include copies (NOT originals) of documents that support your position. If the information is found to be inaccurate, the information provider must update the item with the CRA or have it deleted.

Maria Ny is an experienced free-lance writer from San Diego, California. She writes articles covering a broad range of subjects ranging from Bankruptcy Reform, Credit Repair to mortgage refinancing. Check out her featured articles at http://www.bdnationwidemortgage.com/

Equifax- P.O. Box 740256, Atlanta, Georgia 30374 (800) 685-1111 http://www.equifax.com

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Most of us are aware of the credit score - a numerical quantity widely used to assess your credit worthiness. But there’s another scoring tool that can debar you from getting credit. It’s the Bankruptcy Risk Score - a supplementary score that most creditors and lenders scrutinize prior to offering credit.

Personal bankruptcy seems to be a major consumer credit problem for lenders and credit providers. Since creditors cannot recover losses due to bankruptcy without litigation, so consumers filing bankruptcy are more costly for them. The year 2005 has experienced record number of bankruptcy filings - at least 31.6% higher than 2004 prior to the new law coming into effect.

But the new law has hardly helped debtors. Reports suggest that only 3.3% of the debtors could get rid off debts using debt management plans. The mandatory credit counseling sessions under the new law proved useful to only a maximum of 5% and minimum of 1%-2% of the filers. Here lies the need for Bankruptcy Risk Score to make debtors more aware of how much credit they can deal with. On the other hand, creditors and lenders get the extra edge over traditional scores, as they are better informed of the consumers’ credit status. This helps them in making credit decisions accordingly.

Creditors assess the score when you apply for a mortgage, a credit card or any other bank card. Before extending credit, banks may also review the score while checking your accounts. Banks need to maintain a standard capital-to-risk ratio, and Bankruptcy score enables them to evaluate the risk within their portfolio. A combination of your credit score and spending habits (how you use credit card, shopping card, etc) helps in the evaluation.

You may be looking for a single loan, either a mortgage or an auto loan. But multiple lenders may ask you for the credit report. In order to make up for this, while determining the Bankruptcy score, multiple auto or mortgage inquiries are taken as a single inquiry. Over applying for credit also matters a lot as far as this score is concerned.

Bankruptcy Risk Score Vs FICO Score

Unlike the FICO credit score that gives a general overview of your credit history, the Bankruptcy Risk Score highlights your chances of getting bankrupt. The score varies from -200 to 2018, with the most ranging between 0 - 1000. Higher score indicates greater risk of filing bankruptcy. This is in contrast to the FICO scoring model where a low score implies there is higher risk in offering credit.

With Bankruptcy Risk Scores, creditors can:

• Supervise existing portfolios
• Decide upon the initial credit limit
• Raise or lower the existing credit limits.
• Determine the collateral requirements for mortgages and other secured loans.
• Identify lower and higher risk debtors and then offer loan programs as per their payment ability.

Bankruptcy scores are not available to consumers, only the creditors are informed about it by credit reporting agencies. However, the credit reporting agency, Experian has decided to provide consumers with such scores, knowing which consumers can anticipate debt problems and thus be more cautious. Experian has also compiled the following list of states with higher bankruptcy scores.

Texas

Nevada

New Mexico

Louisiana

Arizona

With a high bankruptcy score, you can hardly get credit at some of the best rates prevailing in the market. Just like you go for a credit repair in order to raise your FICO score, you should look forward to different means of improving the bankruptcy score.
Here are some easy-to-follow steps to guide you in the process.

Pay your bills in time:
Late payments or missed payments create a negative impact on the bankruptcy risk score. Other factors affecting the score are accounts being referred to collection agencies, repossessions or an already declared bankruptcy. You can avoid such situations by using automated payment system which helps you to pay in time. You may also check out with the credit reporting agencies for any error or dispute in your credit report.
Maintain a low debt balance:
Keeping a low debt balance, that is, a low balance-to-limit ratio is necessary. Using up a credit card beyond the limit affects your score. But you can have multiple cards with minimum balance on each. And, in case you have indeed crossed your credit limit, you may consult the creditor for an alternative repayment plan.

Open accounts only when required:
It’s better not to open several accounts within a very short period of time. This can lower both your credit score as well as Bankruptcy score. Credit report statistics show that an individual applying for new credit 6 times in the past 1 year is 8 times more likely to file bankruptcy than others are.

Bankruptcy score depicts whether you will be bankrupt, delinquent or go through a charge off in future. With this score, analysis of your credit history becomes more precise with creditors being well-informed of your credit status. While creditors and lenders can judge your credit worthiness better, you too can decide as to whether you can afford to manage debts, provided you know your score.

Jessica Bennet is a financial writer associated with the MortgageFit Community. With her knowledge and experience, she has made a mark in writing and advising on all financial issues. Her guidance and support has helped us in building up a strong Community where all the members contribute towards industry development.

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