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How to Read Your Credit Report

How to Read Your Credit Report

A credit report contains four basic parts: identifying information, credit history, public records, and inquiries. It’s important to look closely at each section to determine whether or not the information contained in the credit report is correct.


A credit report contains four basic parts: identifying information, credit history, public records, and inquiries. It’s important to look closely at each section to determine whether or not the information contained in the credit report is correct.

Checking your credit report at least once a year is not only a good idea, but crucial to supporting your financial health. Checking your credit report is similar to getting an annual physical at the doctor’s office. Checking your credit report helps ensure that you don’t find yourself in trouble with your credit bureau before it’s too late.

You can get one copy of your credit report at www.annualcreditreport.com from each of the three credit bureaus – Equifax, TransUnion, and Experian. Each of those credit reports may contain different information so it’s important to obtain a credit report from each credit bureau. Creditors voluntarily give information to the credit bureaus and they don’t necessarily report to all three. Getting a credit report from each of the credit bureaus (Equifax, Experian and TransUnion) will enable you to compare and evaluate the credit reports side by side.

Identifying Information
The identifying information on your credit report is your personal information, including birth date, present and previous addresses, social security numbers, phone numbers, and employer information. Individuals reporting to the credit bureaus enter this information, so it’s not unusual to have mild variations on the spelling of your name or your phone number. If there are slight variations on the credit report, it’s best to just leave them. If there are gross errors on the credit report, those need to be corrected.

Credit History
Each credit report will contain information about the credit accounts you have had or currently have. Each individual credit account listed on your credit report is called a trade line. Each credit account will have the name of the creditor and your credit account number. The credit account numbers may be scrambled to keep that information secure. As part of the information about each credit account, you’ll find the name or names on the credit account, the date you opened the credit account, the type of credit (mortgage, car loan, revolving credit, etc), the amount of the loan or the credit limit, the payment amount or how much you still owe, the status of the account (open, closed, inactive, etc), and how well you’ve paid on the account. On Experian’s credit report, you’ll find these items written out in a straightforward manner. On the other credit bureau’s reports, you’ll find payment codes you’ll have to use a key to figure out.

Public Record
This section of your credit report contains any matters of financial public record. It will contain records of bankruptcies, tax liens, or judgments. The things listed in this part of your credit report are very important because they can have a very negative impact on your credit rating.

This part of the credit report lists anyone who has asked to look at your credit history. Inquiries are listed as two types – hard inquiries and soft inquiries. Hard inquiries on your credit report are ones you initiate by filling out a credit application. Soft inquiries are inquiries from companies looking to send out promotional information to a “pre-qualified” group of people.

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Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?

Should I Trust My Bank or Hire a Negotiator To Modify My Mortgage?

loan-modification-should-i-trust-my-bankIf you’re having trouble keeping up with your mortgage payments, then perhaps a mortgage loan modification might be the answer. A loan modification can reduce your monthly mortgage payments and help you keep current with your mortgage based upon your financial means. However, when you talk to your bank or mortgage lender about a modification, are your or the bank’s best interest involved?

The bottom line is the answer to this question. The bottom line for the lender is to make income in the form of interest on money they lend to others. If a borrower fails to make payments as agreed in the mortgage terms, then the lender may have no choice but to foreclose on the home and recoup their losses on the resale of the home. Usually a foreclosure is a great expense to the lender in attorney’s fees, filing fees, and losses incurred while holding the property for sale. All efforts to avoid foreclosure should be taken by the lender, including modifying the loan in extreme cases to help a borrower repay the loan.

Getting Professional Modification Help

Although foreclosures are not desired by lenders, they still have many strict guidelines in making and modifying mortgages to suit the owners and investors of the lending company. Subsequently, it may appear ironic that lenders want to avoid foreclosure, but are also not willing to work with borrowers to negotiate a reasonable settlement for both parties.

A professional foreclosure help specialist company can help you with a loan modification by talking to your bank directly and working with them on your behalf to resolve a mortgage into more affordable terms. These companies are usually run by experts in the mortgage finance industry and present many advantages over a DIY endeavor:

Experience – Many of these professional modification negotiators have been operating for years and have extensive experience in negotiating new mortgage terms. They are familiar with the foreclosure and loan modification process and know what it takes to reach a deal, with even the most stubborn lenders.

Contacts – Foreclosure help specialists usually work with the biggest loan mortgage companies in the country and have many contacts within each. By having and continuing good relations with lenders, they have an upper hand in renegotiating your contract.

Results – In most cases, foreclosure help can secure an agreeable mortgage modification that is acceptable by both lender and borrower. If not, then they can work with the lender on an exit plan to avoid foreclosure by a short sale. In a short sale, you may end up selling your home for less than is owed on the mortgage, but the lender accepts the short amount and writes off the balance. This bodes much better for your credit report than foreclosure.

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What Banks Are Looking for to Grant a Loan Modification

What Banks Are Looking for to Grant a Loan Modification

If you are a homeowner considering a loan modification, keep in mind that a bank is as interested as you are in avoiding foreclosure. If you are a borrower who can continue to make payments, a bank will make every reasonable effort to help you modify your loan. However lenders will not grant loan modifications to every applicant. If you are a borrower and you cannot show the ability to repay the loan on time and consistently for the foreseeable future, then a bank would lose more money in the process and there is little benefit for the lending institution to do a loan modification with you. Foreclosure is a better option for the bank.


A loan modification becomes more of a liability than a foreclosure to the bank when the borrower stops making the payments. Foreclosure is designed to rectify this situation while incurring the least amount of losses from the borrower.

The notion behind turning around a liability is based on income. What amount of income can a homeowner allocate to the mortgage payment while still making ends meet? Is this a reasonable number for the bank to agree upon for a loan modification and let the homeowner stay in the house? What is the loss comparison between the proposed loan modification and the foreclosure? Can that homeowner actually make the loan modification payments that are proposed? What proof of income and cash flow is provided to back up these proposals?

If a bank agrees to a loan modification in lieu of foreclosure and the borrower still cannot make the payment, the bank is likely to lose even more. When a loan modification is agreed upon, the borrower usually has a forbearance period. The borrower’s status is also made current and past due balances are erased. Sometimes those balances are forgiven and other times they are added to the principal balance. Here is an example of the losses that the bank will take if the borrower still cannot meet the modified loan payments:

If a borrower is 90 days late when a loan modification is agreed upon and the forbearance is for three months, the bank is not receiving any payment during that time. The borrower then becomes current and is given a fresh start. But if after the loan modification is complete, the borrower starts missing payments again, the bank must now start the entire foreclosure process again.

Lenders generally will give the homeowner a few months into the loan modification before they file a notice of default, leading to foreclosure. Lenders will eventually foreclose on the property and get about the same in return at auction as they would have had they not engaged in a loan modification with the borrower. The difference is that if the property had gone into foreclosure, they would have had the money months earlier and not spent the time and resources modifying the loan. Loan modifications are very expensive to the bank, especially when they do not work, which is why banks place more stringent requirements on borrowers now to prove their ability to meet the loan modification standards in lieu of foreclosure before adjusting the terms.

More specifically, it is difficult to say exactly what the banks are looking for prior to granting a loan modification, however, ideal candidates have a number of the following characteristics:

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