Health & Fitness
Bad Habits Are Hard to Break
Rebuilding your credit isn't just about paying accounts off to a zero balance. You still need to show that you are capable of making monthly payments on time.
I have worked with this couple for almost 3 years. During this entire time, we made a number of attempts to refinance their 7.5% mortgage. Joe has been out of work and involved with a lawsuit as a result of an automobile accident and Peggy was the only one working. We had discussed many times, how they would handle their outstanding obligations.
I had recommended they workout settlements for their credit card and installment debt, set up 2-3 secured credit cards and then bring the mortgage current.
He got the settlement and they paid off their mortgage, they did not set up anysecured credit cards to begin rebuilding their credit scores and they did not settle their other debts. The problem with paying off their mortgage is that it did not improve their credit scores, as all the other stuff is reporting negatively on their report each month.
Find out what's happening in Manchesterwith free, real-time updates from Patch.
Their intention was to file bankruptcy after they paid off their mortgage, when they met with the attorney, she advised them, they now had too much equity in their home and would not be able to file. What a mess.
They contacted me again, asking if they could get a mortgage to pay off their obligations. Even though they have lots of equity, their credit just doesn’t allow a refinance. Their only option is to get a high interest rate, hard money loan to handle their situation. So they would be going from a 7.5% loan to a 11% loan. Hopefully they follow my advice, settle their debts, set up the secured credit cards and pay their mortgage on time for the next 30 months.
