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More on Credit & Credit Scores
Learn how to effectively manage your credit

1-2-3 Credit & Me: Learn how you can Stabilize, Improve & Maintain your credit throughout your lifetime (Part of the Real Estate & Finance 360 Degrees Series of Books Book 6) by THOMAS (TJ) UNDERWOOD  | Sold by: Services LLC | Oct 19, 2020, updated Summer 2023

What's inside 1-2-3...




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If you are considering purchasing a home or refinancingyou can go to or along with local mortgage lenders in your areato determine what loan will best suit youand your family.  You can compare closing costs, APR's and Par rates to determine what loan will best serve yourand your family's long-term interests.

Learn More About Credit Reports & Credit Scores... 

Your FICO credit score consists of five different categories of items that help determine what your credit score will be. These five categories consist of: 

35% - Payment History

30% - Amounts OwedUtilization

15% - Length of Credit HistoryTime

10% - Types of CreditTypes

10% - New CreditInquiries

The categories listed above are only a general guide for determining a credit score for the average population.

Always keep in mindthe fact that the actual percentages may differ according to your own financial circumstancessuch as history of late payments, no credit historyand so on.

Improving Your Credit Score In A Nutshell

Remember NUTTI or MUTTI in your GUTTI to maximize your credit SCORE, FOREVERMORE!

Follow me here...It will make sense...I promise...

N---“Negativity”try to avoid negative information in your payment history35% of your score

U---keep “Utilization” and amount owed lowkeep debt low30% of your score

T---always pay on “Time,” keep old accounts open15% of your score

T---keep a good mix and have different “Types” of credit10% of your score

I---keep “Inquiries” low by loan shopping within a small window10% of your score

Or Another Way To Look At It

M---don’t “Mess up” your credittry to avoid “negative info” on your report35%

U---keep “Utilization” at a low percentage of your total debtkeep debt low30% of your score

T---always pay on “Time”keep old accounts open15% of your score

T---keep a good mix and “Type” of credit10% of your score

I---keep “Inquiries” for the last 12 months low if you will be seeking new credit10% of your score

Did you know that I set you up for a short catchy Acronym (although somewhat weird sounding—which is why many always remember it) that I created that has the potential to help you take control of your credit for the rest of your life?

If you memorize and utilize the following phrase in the right manner you will be in position to improve your credit position. Feel free to pass it along to your family and friends to help them improve their credit score and credit situation as well.

Although the Acronym (memory trigger) is somewhat “weird” you should easily remember it for the rest of your life by reciting it daily for seven straight days.

Remember NUTTI or MUTTI in your GUTTI to maximize your credit SCORE, FOREVERMORE!

By simply memorizing the above Acronym and utilizing the knowledge gainedyou can start on a real path to successand take positive control of your credit and financial situationand that of your family and loved ones—for the rest of your life!

N  stands for... and M stands for... and is approximately 35% of your score

U  stands for... and is approximately...30% of your score

T  stands for... and is approximately...15% of your score

T  stands for... and is approximately...10% of your score

I  stands for... and is approximately...10% of your score

OK, the seven days are up, I'm sure you have all of the factors that go into maintaining and improving your creditand credit score mastered!

Other Credit Factors That You Must Understand

How Lenders Rate Credit Scores:

Lenders generally rate credit scores from the least credit worthy (E) to the best credit worthy (A). To see where you fall visit the credit report and credit score page and get your score and then come back to this page.

740 or higher A

640-739 A-

620-639 B

599-619 C

520-589 D

510-519 D-

500 or less E

(A)Take your choice of loans at the lowest cost.

(A-)You qualify for conforming conventional loans. You'll pay more for risk based loans.

(B)You may take an FHA/VA loan or even a low down payment loan with desktop underwriting. FHA and VA down payment and underwriting requirements are somewhat more stringent now.

After bankruptcy discharge (Chapter 13) you can apply for a loan if your middle score is 640 or more.

Judgments must be paid. Judgments not paid will stop the progress of your score going up!

After Chapter 7 Bankruptcy where a foreclosure was involved the time period before you could purchase a home again with traditional lenders vary from approximately 3 to 5 years.

After 2 years it would be wise for you to check with several lenders to see what there time frame is if you plan on purchasing another home in the future using traditional lenders.

In the past I have worked with home buyers who have purchased a home 4 years after filing bankruptcy and approximately 4 years from the date of the foreclosure.

(C)You can qualify for a sub-prime loan, but your interest rate will be significantly higher. Expect a pre-payment penalty.

(D)Most lenders will deny your loan but there are a few "hard money" sub-prime lenders who will approve a loan if you have sufficient down payment. Mortgage Brokers have access to these wholesale lenders.

(D-)Only the rare sub-prime lender will approve a loan for someone with a score below 520, and a large down payment will be requiredusually 25 to 50 percent. Other conditions will apply as well.

(E)It is wise to not even attempt to get a loan at this time. If your credit is at a "C" or below it may be a better option to work on improving your credit and purchasing at a later date or pursuing other options.

Don’t Open New Credit When Applying For A Loan!

If you are currently in the process of buying a home or applying for a new loan of any type, be sure not to apply or open new credit (or utilize your existing credit) "prior to" closing on your loanand in the case of a home purchaseprior to closing on your home.

Applying for (or utilizing existing credit) new credit "prior to" closing could possibly lead to the denial or complication of your loanwhich could delayor even preventclosing from occurring.

After one year of home payments your loan will be considered "seasoned"and you will begin to receive many offers for creditif you have not received many within the first year of home ownership.

You must always recognize your financial conditionand know deep inside whether you can use credit wisely, save wisely and spend wisely.

That is a good first stepthe real key however, is that once you know your level of financial disciplineyou do practical things that can improve your financial management skills in a meaningful waywhich should lead to better money management habits and improved living conditions for youand your family.

An easy strategy to build your credit rather quickly is to get a number of cards, say 3 or 4 and use sparingly and pay off your balance in full monthly.

Doing that in conjunction with your new home purchase should lead to the rise in your credit score in the next 24 monthsin many cases substantially. 

Real Estate Market Meltdown & Credit

In the past many consumers did not have the right approach when they dealt with real estate agents, loan officers and new home builders.

Prior to—and still today to a lesser degree—the real estate and financial market meltdown many consumers would depend on the real estate agent and/or loan officer to pull their credit report and credit score and recommend a loan product.

In many cases even those with decent credit were placed into sub-prime and other loans with high fees that were not in their best interest.

Because they had noor a limited conceptual view of what a good loan wasand what a bad loan was, they in many cases agreed to the terms in order to get into the house of their dreams.

Many had housing and debt income ratios over 50% which in many cases signaled they had too much house based on their income.

Many of the real estate and loan officers and companies of that era are no longer in the industry (for good reason) due to their reckless and selfish short term goals.

Because many did not serve their client in a manner that was best for their clientthey did not create an environment for long term success in our opinion.

By doing what they thought was the thing to do at the time (get the highest paying loan or commission that benefited them and/or their company the most—and not their client) they put many homeowners at risk unnecessarily and many lost or had difficulty maintaining their home.

Hopefully you and your family did not fall victim to their antics.

Those of you who are here now and have never purchased a homenow have the opportunity to purchase your home in a manner that benefits youand your family the most.

Many consumers did not know their credit situation or credit score prior to contacting their real estate agent and/or loan officerand that was a major mistake for many.

It is imperative that you know your credit position and improve upon itprior tomeeting an agent or loan officer.

You should know that if you have a top tier credit score (740 and up) you should get a top tier interest rate (the lowest interest rate available).

You should know if you have fair credit (620-640 credit score) you can still qualify for an FHA or conventional loan at a good rate.

You should know that if you have a 620 score or above and no negative information on your credityou don’t have to settle for a sub-prime loan like many consumers did over the last ten years or so.

You should know that in most casesif you have the right income and pay down your debt aggressivelyyou can improve your credit and  credit score in a short period of time!

By understanding your credit position prior to meeting with a real estate agent and/or loan officeryou put yourself “in control” and operate from a position of strength.

An analogy can be made with a person who purchases a car and knows their credit situation up front, gets pre-qualified or approved at their local credit union, does the research on the vehicle they want—including price and performance etceteraand “then” go to the dealer to purchase.

By doing what they “should have done” up frontthey put themselves in a position to be in control for the most part. If they don’t feel the deal is good enough or one to their liking they can walk away and take their business elsewhere.

Contrast that with a consumer who wants to purchase a car and has no clue of their credit situation, goes into the dealership just wanting a car with no concern for the current value of the car, resale value of the car, performance etcetera(have not done any research)and they have not been pre-qualified or approved for a loan anywhere.

In most cases the dealer will be in control and they will be easy picking for any salesperson.

Likewise, those who refuse to understand credit and know their credit position prior to purchasing (or selling) their home put themselves and their family at even greater risk due to a home purchase normally being of greater significance.

By not “being in control” you put yourself and your family in a disadvantageous position—when it really did not have to be that way!

Be proactive and take the time now to master what makes up your credit, the ratios involved and how lenders rate your credit.

If you master and take seriously the factors that go into your creditand how lenders rate your credit scoreyou will put yourself ahead of most people in the general population when it comes to understanding credit.

You will even put yourself ahead of many real estate and mortgage loan professionals when it comes to the understandingand application of credit!

By doing so, you will put yourself in position to be in control of the home purchase or home sale process—or any loan transaction that involves the use of credit—and credit scoring!

You will also be in better position to maintain and improve your and your family’s credit—throughout your lifetime!


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Thomas (TJ) Underwood has been providing financial advice as a tax practitioner since the mid 1980’s and began his financial planning career (while earning a Bachelor of Science Degree in Business Administration/Finance/Marketing), in Detroit at Wayne State University.  From 2010 up to the present he continues to provide visitors timely personal finance and wealth building advice and articles—including real estate advice—on 3 sites that he has created since 2010. 

Even though he is an active real estate Broker in the Atlanta Metropolitan area, he continues to blog consistently to help visitors and those who desire lasting financial and life changing success the opportunity to change their life for the better in a more efficient way. 

You can learn more about him and gain access to all three sites that he has created by going to Who is the creator of page.

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