Credit Bad, No Credit Score, How to Build Credit – Question #2
Question Submitted by: Jan, Slidell, Louisiana
I refinanced our home into a poor loan with Countrywide. Our loan is now with Bank of America and we are two payments behind. Our credit is bad, any solutions?
Answer:
Jan – Thank you for your reaching out, and I know how difficult it can be when your credit is bad and you feel you have no options. It’s impossible to give you all your options with this information; however, here are a couple thoughts:
1) Your bank will not tell you this, but as long as you are paying any part of your payment, your bank will not negotiate with you on your loan modification. Myself and too many of my clients have gone through this – when you pay your bills, you don’t qualify for these programs. The irony of that statement amazes me every time I say it.
When dealing with the banks on the loan modification, be very nice (I guess most people with credit that’s bad are not that kind) and keep asking them for a solution. The banks are so overwhelmed that they cannot keep up with the requests they have and you won’t get their attention if you are paying.
2) There is no way around it; at the end of this process you will say, “My credit is bad.”
3) Your bank is going to tell you that you will be “unlendable” for 7 years because of credit bad. That is false. If you understand how to build credit, you can have a 720 credit score 5-6 years before those late payments fall off your credit report.
The key is to reestablishing your credit score is to start now. Also, don’t beat yourself up about this process, we have all had learning experiences over the past two years, and this too shall pass.
Credit Bad, No Credit Score, How to Build Credit – Question #2
Thank you for your information and a good response from you.
Hi Philip,
This is exactly what has happened to me. I am in a Loan Modification with Countrywide. They told me it would take three months when it would be finished. It will be
five months the first of August. One thing they did tell me was if you wanted to know anything about your loan you need to call them as they will not call you as they have so many people filling for the loan.
Another thing I read in the paper that Countrywide had over charged 220,000 people at the tune of $1.8 million people and they are trying to take care of that first. I fell in that group. Everytime I make my payment they tell me just because I make my payments that doesn’t mean I will get the loan. The bad part of that for me is they say if the loan don’t go through that they will foreclose on me. So should I seek an attorney. I was told by a CCC that I should file a chapter 7 bankruptcy. Should I go ahead and do that before the LOM is finished? The only problem with that is if the LOM doesn’t go through I would need to fill a chapter 13 to save my house.
Thank you
Betty, it’s impossible for me to give you advice with this limited information. I assume that your home is worth less than the loan you have on it. You can rest assure that the bank does not want the property back and as long as you make your payments, you are not going to be a priority. I have clients that have not made a payment for 21 months, and they are still in their home. In my experience, depending on how “underwater” you are, the banks will bend over backwards to work with you as long as you are in communication with them. When you talk to them, be kind, explain to them your situation, and that you want to stay in your property. They will figure out a way to make it happen.
Hi, Philip,
I live in canada, but right now I have an Internet Business,
it is not doing very well as I am using FREE advertising only and have been told I need advertising money, which I do not have.
I know of someone who is with a Nevada Company who uses personal credit people and tells me it is possible to set up a LLC in NV get business credit and then use it to advertise my business to make money to be able to pay the lenders back.
What do you think about that? My personal credit may be in trouble as some of my cards are maxed, but I have made all of the minimun payments and a bit more every month.
Actually one credit card Company has offered me more credit on my card @K which I don’t want because it is personal credit and I need credit for my business.
Marilyn Broomer