Norada Real Estate Investments

How To Improve Your FICO Credit Score: A Guide

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Improving your FICO® credit score is a gradual process that demands patience and diligent financial management. These scores are a crucial measure of your creditworthiness, playing a significant role in determining the terms of loans, mortgages, and credit cards you can secure. They are based on an analysis of your credit payment patterns over a period, giving more weight to recent financial behaviors compared to older ones.

FICO scores provide lenders with insights into your financial responsibility and reliability. Higher scores signify a lower credit risk and can result in favorable interest rates and better loan terms. However, achieving a desirable FICO score requires a consistent history of responsible borrowing and payments.

Tips to Improve Your FICO Credit Score:

Below are some general tips to follow that may increase your FICO credit score:

1. Monitor and Address Negative Factors:

  • Regularly check the negative factors listed with your FICO score to understand key areas for improvement.
  • Address these areas diligently to enhance your credit standing.

2. Smart Management of New Accounts:

  • Avoid opening unnecessary accounts: Opening new accounts for the sole purpose of improving your credit profile is not advisable.
  • Open new credit accounts responsibly when needed and maintain a positive payment history.

3. Maintain Low Balances on Revolving Credit:

  • Strive to keep balances low: High outstanding credit card debt can negatively impact your FICO score.
  • Manage revolving credit responsibly to maintain a favorable credit utilization ratio.

4. Prioritize Debt Repayment:

  • Focus on debt payoff: Instead of shifting debt between credit cards, work on paying down your total revolving debt.
  • Prioritize paying off debt to see a positive impact on your FICO score.

5. Timely Bill Payments:

  • Prompt bill payments: Make sure to pay all your bills on time to maintain a good credit record.
  • Avoid delinquencies and collections to prevent a major negative impact on your FICO score.

6. Optimize Credit Card Usage:

  • Responsible credit card management: Utilize your credit cards within the recommended credit limit to showcase responsible financial behavior.
  • Regular, timely payments on credit cards contribute positively to your FICO score.

7. Strategic Loan Rate Shopping:

  • Plan your loan rate shopping: If you're looking for a loan, do your rate comparisons within a focused timeframe to minimize negative impacts on your FICO score.

8. Strategic Account Management:

  • Avoid unnecessary account closures: Closing unused credit cards without a clear reason can potentially harm your FICO score.
  • Maintain a healthy credit mix and usage to demonstrate responsible financial behavior.

9. Seek Professional Guidance if Needed:

  • Consult a credit counselor: If you're facing financial difficulties, consider seeking assistance from a legitimate credit counseling service to improve your financial management.
  • Focus on managing your credit responsibly to enhance your FICO score over time.

10. Rebuild Credit History:

  • Establish new credit accounts: Responsibly open new accounts to rebuild your credit history and showcase positive financial behavior.
  • Ensure timely payments on these new accounts to demonstrate creditworthiness.

11. Maintain a Long-Term Focus:

  • Understand the impact of time: Past credit issues have less influence on your FICO score as they age, and recent good payment history matters more.
  • Consistent, on-time payments over an extended period will gradually improve your credit profile.

12. Practice Informed Loan Shopping:

  • Consolidate loan inquiries: When shopping for loans, do so within a concentrated period to minimize the impact on your FICO score.
  • Be aware of the purpose: Understand how FICO scores differentiate between loan searches to manage your applications wisely.

13. Maintain a Balanced Credit Mix:

  • Diversify your credit portfolio: Having a mix of credit types, including credit cards and installment loans, can positively influence your FICO score.
  • Showcase responsible credit management across various credit accounts.

14. Regular Credit Monitoring:

  • Monitor your credit report: Regularly check your credit report for any inaccuracies or discrepancies that may be affecting your FICO score.
  • Address errors promptly to ensure an accurate representation of your credit history.

Reasons to Improve Your FICO Credit Score:

Improving your FICO credit score is essential for several compelling reasons:

1. Better Interest Rates:

Having a higher FICO score allows you to qualify for lower interest rates on loans and credit cards. This results in substantial savings over the life of the loan or when carrying a credit card balance.

2. Easier Loan Approval:

A high FICO score increases your chances of getting approved for loans, including mortgages, auto loans, and personal loans. Lenders view a higher score as an indicator of lower risk.

3. Access to More Credit Options:

A good credit score broadens your access to a variety of credit products, providing more options to manage your finances effectively and choose credit that suits your needs.

4. Lower Insurance Premiums:

Insurance companies often use your FICO score to determine your insurance premiums. A higher score can lead to lower premiums, saving you money on insurance policies.

5. Enhanced Rental Opportunities:

Landlords may check your credit score when considering rental applications. A good FICO score improves your chances of securing a rental property and may even lead to better rental terms.

6. Employment Opportunities:

Some employers review credit scores as part of their hiring process, especially for roles involving financial responsibilities. A higher FICO score can positively impact job prospects.

7. Financial Security and Peace of Mind:

Maintaining a good credit score provides a sense of financial security and peace of mind, knowing that you have a strong credit foundation to support your future financial goals and endeavors.

Improving your FICO credit score is a proactive step toward financial well-being and stability, offering a wide array of benefits that can positively impact your financial life.

5 Reasons to Hold Real Estate in a Land Trust

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Are you a target for tenant lawsuits? Are your assets easy to locate? Do you own rental properties in your own name? You wouldn’t walk around with a financial statement taped to your forehead would you? So why would you have your most valuable assets exposed to public scrutiny?

Anyone can go down to the county courthouse or recorder’s office and look up the owner of any property. Real estate records are now computerized, so all of your real estate holdings can be located at the touch of a button! Lawyers, creditors, IRS agents, newspaper reporters, tenants and other “snoops” can find out what you own and whether you are worth going after.

Don’t give them the ammunition – make your real estate ownership hard to find!

Why Should You Hold Real Estate in a Land Trust?

1. Protection from liens. Real estate titled in a trust name is not subject to liens against the beneficiary of the trust. For example, if you are dealing with a seller in foreclosure, a judgment holder or the IRS can file a claim against the property in the name of the seller. If the property is titled into trust, the personal judgments or liens of the seller will not attach to the property.

2. Protection from title claims. If you sign a warranty deed in your own name, you are subject to potential title claims against you if there is a problem with title to the property. For example, a lien filed without your knowledge could result in liability against you, even if you purchased title insurance. A land trust in your place as seller will protect you personally against many types of title claims because the claim will be limited to the trust. If the trust already sold the property, it has no assets and thus limits your exposure to title claims.

3. Discouraging Litigation. Let’s face it, people tend to only sue others who appear to have money. Attorneys who work on contingency are only likely to take cases which they can not only win, but collect, since their fee is based on collection. If your properties are hard to find, you will appear “broke” and less worth suing. Even if a potential plaintiff thinks you have assets, the difficult prospect of finding and attaching these assets will discourage litigation against you.

4. Protection from HOA Claims. When you take title to a property in a homeowner’s association (HOA), you become personally liable for all dues and assessments. This means if you buy a condo in your own name and the association assesses an amount due, they can place a lien on the property and/or sue you PERSONALLY for the obligation! Don’t take title in your name in an HOA, but instead take title in a land trust so that the trust itself (and thus the property) will be the sole recourse for the homeowner’s association’s debts.

5. Making contracts assignable. The ownership of a land trust (called the “beneficial interest”) is assignable, similar to the way stock in a corporation is assignable. Once property is title in trust, the beneficiary of the trust can be changed without changing title to the property. This can be very advantageous in the case of a real estate contract that is non-assignable, such as in the case of a bank-owned or HUD property. Instead of making your offer in your own name, make the offer in the name of a land trust, then assign your interest in the land trust to a third party.

How the FICO Do I Repair My Credit?  [Infographic]

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What is a FICO Score? Most credit bureau scores in the U.S. are calculated from software developed by Fair Isaac and Company. They are commonly referred to as FICO scores and include a rating based on information found in credit reports.

If you're planning to finance the purchase of any investment properties now or in the future, then knowing what make up your credit score and how to improve it are critical.
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Why It's Still Hard To Get A Mortgage

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The housing market may be coming back, but a growing number of policy makers have expressed concerns recently that it’s still too hard to get a mortgage.

Federal Reserve governor Elizabeth Duke outlined some of these concerns and their causes in a speech last month. She was quick to note — as is anyone else who has sounded similar alarms — that she doesn’t want the market to return to the go-go days of 2005 or 2006 when anyone who could fog a mirror could get a loan. “But I also don’t think it would be a good idea to go back to the quite restrictive credit conditions of the early 1980s,” she said in the speech to mortgage bankers.

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Reduce Your Taxes by $10,000 with a Solo 401(k)

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If you're self-employed or have a small business, the idea of a 401(k) may make you jump to two conclusions: “My company is too small” or “I can’t afford it.”  Well, you’re not too small and you can afford it!

A Solo 401(k) is inexpensive to set up and easy to maintain – and it delivers substantial tax and saving advantages.  Use a Solo 401(k) plan if you’re self-employed or run an owner-only business.  You could add multiple owners and a spouse to a Solo 401(k) plan, but if you add full-time employees you’ll need to convert it to a more traditional IRA  plan.

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Is the Fed’s QE3 Good for the Housing Market?

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Last week, the Federal Reserve announced a new round of “quantitative easing,” or QE3, meaning the Federal Reserve will  fire up the printing presses to buy $40 billion worth of  mortgage-backed securities (MBS) every month on an open-ended basis in an effort to further drive down historically low interest rates.

Federal Reserve Chairman Ben Bernanke said QE3 should put downward pressure on mortgage rates, helping the housing market.  By lowering borrowing costs and spurring  banks to lend more, the Fed hopes to induce more spending and eventually set  the stage for more hiring.  The Fed tied its bond-purchase program explicitly to jobs, saying it will keep buying bonds until it sees a substantial improvement  in the labor market.

Who benefits from QE3?

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Top 6 Reasons Mortgage Applications are Rejected

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Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It's tough — especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

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When Is Cash Better Than Financing?

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Using all cash to purchase investment property may be better than financing in two particular situations.

The first situation is a short-term deal, that is, you intend to sell the property shortly after you buy it (known as “flipping”). When you have the cash to close quickly, you can generally get a larger discount on the price of a property. In this case, financing could delay the transaction long enough to lose an opportunity.

You’ve heard the expression, “money talks, BS walks.” This is particularly true when making an offer to purchase a property through a real estate agent. The real estate agent is more likely to recommend to their client a purchase offer that is not contingent on the investor obtaining bank financing.

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Mortgage Overhaul and What it Means for You

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By the time you read this, the new 2,300 page financial reform bill is likely to be making the headlines. The Senate has already approved the new bill and President Obama is expected to sign it into law this week – despite the fact that many of the provisions related to specific regulations have yet to even be written. If that sounds faintly disturbing, don't worry, your concern is noted and shared by many experts throughout the nation. However, there are sweeping changes that are already apparent despite the lack of specific details.

Although broad in scope, home buyers and sellers are likely to be among the first impacted by the new provisions. They represent one of the most comprehensive – top to bottom changes to the finance, valuation, types of mortgage products offered and how lenders are compensated to take place in decades.  In fact, there are even new rules for that provide capital for the purchase of mortgages.

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The Quick and Expected Climb to 6% Mortgage Rates

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Mortgage rates have been steadily climbing, from a low of 4.5% around November 27, 2009 to above 5% on December 22, 2009.  For the past two months I've been warning that this will eventually happen.  It's not because the economy is recovering; it isn't recovering.  The reason mortgage rates will rise to 6% or above, sooner rather than later is because that is the "natural" market.

About a year ago, the Federal Reserve announced a $1.25 Trillion mortgage rates subsidy, by purchasing mortgage-backed securities in the open market, through March, 2010.  Right before the subsidy was announced, mortgage rates were at or above 6%.  The subsidy was referred to as Bernanke's "nuclear option" meaning he was using an extraordinary monetary stimulus to keep mortgage rates artificially low.

One year and 12 months into the 15-month game, we're at $1.07 Trillion spent on this open market MBS purchase program.  This means that the Fed still has about $150 Billion to spend in three months, so mortgage rates should stay around 5%, right?  After all, the Fed only spent $80 billion/month and they have at least 2 months of money left.

Markets are discounting mechanisms meaning that traders anticipate how potent the Fed can be.  The Fed is just about out of bullets and MBS traders know it.  Let me try to give you an example of what the Fed did by recanting the explanation I gave, to a Del Mar Realtor, on the beach this summer.

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Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
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