Housing Wire – In what it is calling a historic trend reversal, credit score provider FICO, is seeing more borrowers with a high credit score preferring to pay their monthly credit card bill over their mortgage.

“We’re identifying lending industry situations in FICO Score Trends that to our knowledge have never been seen before,” said Dr. Mark Greene, CEO of FICO, in a statement. “Economic instability is creating unknown risk in lenders’ credit portfolios as well as counter-intuitive trends in consumer behavior.”

The shift to a consumer preference to stay current on unsecured debt, as opposed to secured debt, began last year. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on credit cards. In 2005, credit card delinquency risk was three times greater than today. In 2008, the lower to credit cards being just 1.6 times more likely to become 90 days delinquent than were mortgage loans.

The results echo data released by credit info provider, TransUnion, earlier this month. That study from earlier this month, found the share of borrowers who are delinquent on their mortgages but current on their credit cards rose to 6.6% as of Q309 (from 4.3% in Q108). At the same time, the share of borrowers that are delinquent on credit cards but current on their mortgages slipped to 3.6% from 4.1%.

“The combined percentage of loans in foreclosure or at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.”

Delinquencies Continue to Climb in Latest MBA National Delinquency Survey
MBA – 11/19/2009

Is it possible to have no late payments and still have a chargeoff with a creditor. Isn’t that considered to be reporting incorrectly. Afterall how can one have no late payments and a chargeoff?? What type of letter can one send to get this corrected? please help!!!

thankyou!!

Diane (more…)

Your website has been very helpful, thank you!
I was unable to find this question in your site.

Whether the mortgage company can still report to the credit agencies the lack of payments during the short sale process?

I just received their short sale packet, but I am unable to pay. Can I dispute it if they put something on my credit report? I will be doing the QWR letter, but what about after they respond to it?

Thank you Paul!
God bless you!
Michelle (more…)

I’m not sure if you can answer this question. I’ve been reading it to clear up my credit but I have a different question now.

I’ve been renting a house for about 8 years and for the last 5 years I’ve been paying the property taxes. We heard that you can sometimes get a house by paying the property taxes. Is this true?

Lenore (more…)

My husband and I have been trying to sell a house in Pittsburgh for 11 months now. We have been making every payment on time even though we are not living there. At this point, we need to get out from under the house. 

Our agent has suggested a short sale.  However, the banks won’t talk to us until we are two months defaulted on the loan. Our credit scores are in the high 700′s.

Do we default on the loan and risk lowering our score to get out from under the house?

Denise (more…)

I have a credit card account that was closed because it was maxed out and i was not able to pay the minimum at the time (went on for about 5 months). Now that the account is closed, what happends next? I don’t understand the process. Can you please help me?

Wilfredo (more…)

Hello Paul,

I am beginning the process of obtaining a mortgage and pulled my credit reports only to find a car loan on them that I didn’t recognize.  The loan was listed as a joint account with my dad.  I spoke with my father who said that he had opened the account up when I turned 18 to help me build credit.  While I appreciate his thought process I am a bit disturbed about him doing it without my knowing. 

The 36 month loan was paid on time every month except one where it was paid within 30 days.  I’m wondering if having the loan on my report despite the late payment is better than not having a loan on it at all?  Can you please help me figure out if I should leave it on or dispute to have it removed.  Currently my score is 645 but should go up some as I have found a couple of errors.  I have 1 credit card that has been paid on time every month for 8 years and the rest of the information on my report relates to utilities so I don’t have alot of credit built yet.

Thanks in advance.
Lisa (more…)

I have a fair credit. When I got my three credit reports, I found things that have expired – that is, they were over seven years old. When do these things get taken off your credit history? I thought it was after seven years. Two are credit cards that have been closed 9 years ago – one was car lease that was in dispute with the lease company. That one is over eight years. My m,orage broker told me last uyear that these things would be taken off automatically. Is this true?

Michael (more…)

I recently made a decision to remove a renter from a house I own and place it on the market again.  Due to the problems with the economy I had to rent the house in the first place because I was having problems selling it.

When I removed the renter and placed the house on the market, I had no income to pay the mortgage.  Knowing this would be the case, I contacted the mortgage company immediately and informed them of what I was attempting to do.

They very nicely agreed to place me into a forbearance agreement for the time the house was on the market.  They told me they would still have to report six months of no payments.

At the time, I thought six months of no payments under forbearance would not damage my credit as much as six months of no payments with no agreement.  I was wrong.

The mortgage lender is reporting the six month period as no payments without stating an agreement was made due to special circumstances.  My credit report looks as if I simply refused to pay for a six month period.  There is no documentation showing the mortgage company agreed to this.

My credit is ruined now.  I can’t even trade my car WITH a co-signer let alone without one.
According to someone I talked to at TransUnion, that period of six months where I was under the forbearance agreement will have a negative effect on my credit score for seven years.

I’m regretting even trying to sell the house now.  I thought I was being responsible by working something out with my mortgage company but it appears as if I made a huge mistake.

I have contacted my mortgage company and they refuse to document with the credit bureaus the reason for my non-payment period.  They also refuse to remove it from my credit reports.

I submitted a dispute with the credit bureaus and they too refused to remove the negative credit or to document in any way the forbearance agreement.

Is there any path left for me?  I can’t stand the fact that I will have those six months of non-payments on my credit reports for seven years.

It just seems unfair.

Eric (more…)