Office of Disability Concerns
Credit Matters
Since poor credit is one of the major reasons a person may be turned down for a home loan, it is important to address credit issues before applying. One of the first steps that a person who is interested in getting a home loan can do is to review their credit rating. If they have not established credit, they should. If they have a poor credit rating, they should take steps to repair it.
There are three credit rating agencies in the United States. These agencies have information about everyone in the nation who has established credit for any purpose. The three agencies are:
Equifax
P.O. Box 740241
Atlanta, Georgia 30374-0241
1-800-685-1111
Experian
P.O. Box 949
Allen, Texas 75013-0949
1-888-397-3742
Trans Union
P.O. Box 1000
Chester, Pennsylvania 19022
1-800-916-8800
The Credit Report
The Credit Rating Agency (CRA) must tell an inquirer everything in that person’s report, and in most cases, the sources of the information. Generally, there is a $9 charge for a copy of a person’s report from one of the three CRA’s. It is a good idea to request a report from each of the agencies as it is possible that one may have information not included in the others. If an inquirer requests a credit report within 60 days of being denied credit, insurance or employment, the report is free.
A credit report will include identifying information about the person; payment history of debts and any debts which have been referred to a collection agency; and a listing of all creditors who have asked for a person’s credit report over the past year. Public records such as bankruptcies, foreclosures, or tax liens may appear on a credit report.
Under the law it is possible to challenge inaccurate or incomplete information provided in a credit report. It is a good idea to contact both the CRA and the original provider of the information to the CRA with documentation supporting the position of the challenger while requesting corrections. Disputed information that cannot be verified must be deleted from a credit report.
A credit report prepared by one of the credit reporting agencies will contain a credit score. This credit score will generally run between 200 and 900 points with the higher score indicating a better rating. This score will tell a potential lender how likely a person is to repay a loan. A score of 600 or better is considered satisfactory by some lenders.
How to Repair or Establish Credit
If a person has a lower credit score, it is possible to repair their credit rating. The credit report will identify specific problems. While a bankruptcy remains for ten years, most information is retained for seven years from the date the event took place. Contact creditors immediately if there is a problem repaying a debt. Sometimes a plan can be mutually agreed upon which will prevent a debt being turned over to a collection agency. If a collection agency has become involved, an inquirer may contact that agency and set up a repayment plan. Some travel, entertainment, gasoline card companies, local retailers, and credit unions do not supply information to the credit reporting agencies. If a person has a good repayment history with a creditor who does not report, that person may request the good information be added to their credit report.
Occasionally a person may be denied a home loan because they have no credit history. Lenders are interested in knowing how a person repays their debts. This information may come from non-traditional sources. For instance, a renter may secure a statement from a landlord verifying that the renter has paid rent on time and in full over a given period of time. Utility companies may verify that utility bills were paid regularly. A person can request a loan and have a co-signer on that loan to establish a good credit history.
If further help is needed, Consumer Credit Counseling Service is offered in locations across Oklahoma. Call 1-800-364-2227 for the nearest location. Email support@ccccsok.com or visit the website http://www.cccsok./org for online counseling. Trained counselors are available to discuss housing issues and review a credit report. Consumer Credit Counseling Service may be able to stop late fees or bring an account current. A visit is confidential for a consumer seeking simple advice and information. (If a formal Debt Repayment Program is agreed upon, CCCS will report this to the credit reporting agencies.)
There are many credit companies available which claim to clear up credit. If a person has doubts about a company, that person may check out information about the company with the Better Business Bureau.
Establishing and maintaining good credit is important for any person who is seeking to meet their housing needs. First a person will want to review their credit report. With this information the consumer may take positive steps to meet any challenges.
HUD HOMES
A HUD HOME is a single-family property that had a mortgage insured by FHA. The mortgage went into default and was foreclosed by the lender, who then filed a claim with FHA for the balance due on the mortgage and conveys title of the property to HUD.
Most HUD homes are initially offered for sale to purchasers who will be owner/occupants. All properties available for sale, including new listings, are published each Friday in the Broker Information Release (BIR). BIRs are available at the HUD Oklahoma State Office, 500 West Main Street, Oklahoma City, in the first floor lobby.
The property list is also available on the Oklahoma State Homepage with listings updated weekly.
Any real estate broker who is properly registered with the HUD Oklahoma State Office may submit contracts for purchase.
HUD homes are offered on the sales market at fair market value, based on a recent appraisal.
Bids are opened daily on homes on the extended listing; for the initial offering, homes are listed for a ten-day bidding period, with bid openings each Wednesday. Purchasers on initial offerings are limited to owner-occupants. If not sold at the initial offering, properties are then available to all buyers, including investors.
Buyers must obtain their own financing. FHA mortgage insurance is available for certain properties through approved lenders, provided the purchaser meets FHA credit qualifications.
HUD will pay up to 5 percent closing costs for owner-occupant purchasers.
HUD will pay up to 6 percent real estate commission.
Homes are sold in as-is condition.
Purchasers must be able to finance the purchase. Most initial sales are open only to bidders who intend to occupy the house as their principal residence.
If you are interested in buying a HUD home, check with your real estate agent.
Adapted by the Office of Disability Concerns from information available on the HUD website.
