Buying Foreclosures

Investing in foreclosure property is a great way to set up another stream of income. Many people decide to invest in a foreclosure property so that they will have some additional money coming in each month. But before you start looking for a foreclosure property to invest in, you will want to make sure you know what to look for.

Assessing a foreclosure property can sometimes be the most difficult part of the buying process. It is during this stage that you will decide which property is best for you, and how much money you think you will be able to make. Remember you make your money when you BUY.

When assessing a foreclosure property the first thing that you want to do is find out how much the repairs will be before you can re-sell it, or set it up as a rental property. Every dollar that you have to put into the home will cut back on the amount of profit. If you are not skilled enough to make an accurate assessment in this area, you will want to get a contractor to look at the property. They will be able to give you an estimate of how much the repairs are going to cost.

After assessing the repairs, you will then want to figure out how much profit you think you can make on the home. This may seem difficult, but you should be able to make an educated guess without many problems at all. The first thing that you will need to do is factor in all of the repair costs. After that, if you plan on renting the home, you will want to get an idea of how much rent you can charge per month. This will give you an idea of your monthly cash flow. You can then take this number to calculate the amount of time that you will need to make back your initial investment and start profiting. If you are going to be reselling the house, get an idea of what the market value is on the home. This can be done by checking out similar homes in the area. You can easily get CMA (competitive market analysis) free from myself or your local Realtor. After you have done this, you should be able to calculate your profit.

Investing in a foreclosure property is a great way to make some extra money. Who knows, you may find yourself buying a second property before you know it.

Cash Back At Closing

Leading up to the current mortgage meltdown, one of the most common forms of real estate and mortgage fraud being perpetrated was cash back at closing. Unfortunately, even after we have witnessed the fallout from bad loans, cash back at closing continues to be a problem. Many people, even real estate professionals, consider it to be at its very worst a victimless crime. They see nothing wrong with it.In order to address the problem, we must first realize what we are dealing with. In this Cash Back at Closing Q&A, I answer the two most basic questions about cash back at closing: What is it? and Why is it wrong? I then go on to answer several of the most common questions I hear from consumers and real estate professionals. In these answers I explore some of the subtleties and gray areas where consumers and professionals often become confused.

Question: What is cash back at closing?

Answer: Cash back at closing occurs when a buyer agrees to pay more for a property than its true market value, so he or she can borrow more money than the home is worth and receive the excess proceeds in the form of cash, credit, or something else of value when the transaction is completed (closed).

A common myth is that as long as the lender’s appraiser approved the sale amount, it’s okay. The truth, however, is that the value of a house is whatever a buyer is willing to pay for it and the seller is willing to accept for it or the appraised value (whichever is lower). For example, if the seller is willing to sell their property for $250,000 to a buyer who agrees to pay that amount, the buyer and seller cannot agree to put the deal together at $325,000, even if an appraiser sets the home’s value at that amount.

Question: Why is cash back at closing wrong?

Answer: Cash back at closing is wrong for many reasons, including the following:

• It fools the lender into approving a mortgage loan in excess of the property’s true market value. If the borrower defaults on the loan, the value of the collateral (the home in this case), would be insufficient to cover the debt.
• Cash back deals place the borrower in a negative equity situation. If the person experiences a financial setback, he or she has no equity safety net; that is, the person is less able to refinance out of trouble using the equity in the home.
• Property values are inflated making housing less affordable.
• Property taxes, which are calculated on property values, also become inflated.
• Housing markets become unstable as housing bubbles form as a result of artificially inflated prices.

Note: Cash back at closing constitutes lying to the lender, something that is strictly prohibited on the Uniform Residential Loan Application or 1003 (ten-o-three) that every homebuyer/borrower must sign when applying for a mortgage loan. The 1003, which is authorized by Title 18 of the United States Code, Section 1001, is very clear in this regard. To paraphrase, you cannot lie on a loan application or any other document related to a transaction. When a buyer, appraiser, real estate agent, loan officer, or another party provides a false statement of a property’s value on a 1003 or any other document related to the mortgage loan, they have lied, which means they have also broken the law.

Question: Is it ever legal for the buyer/borrower to receive cash back at closing?

Answer: When I write about cash back at closing, I am primarily talking about cases in which the lender is being duped into approving a mortgage loan for more money than the property is worth so the buyer/borrower can receive a cash profit when the deal closes. I am not writing about instances in which a seller, for example, hands the buyer a couple hundred dollars to cover the cost of repairing a few minor defects that were discovered between the signing of the purchase agreement and closing.

There are several cases in which it may be okay for the buyer/borrower to receive cash back at closing, such as the following:

• You refinance your mortgage to cash out some or all of the equity in your home.
• Your agent agrees to refund a portion of his or her commission at closing, a practice I would never recommend. This is a very gray area. Some lenders allow it and some do not, so if you (as an agent) choose to do this, make sure you fully disclose it to the lender on the HUD-1 as a debit to the selling agent’s commission and a credit to the buyer. This also must be reported to the IRS.

A better way to handle situations like this may be for the agent to reduce the amount of his or her commission during the negotiation of the sale, so that no money needs to be transferred at closing. According to most CPAs I have talked to, this “credit” actually needs to be recorded as a reduction of their basis in the sales price. For example, if the buyer purchased the property for $300,000 but paid only $290,000 with the reduced commission, then the official sales price is $290,000. In any event, full disclosure is a must, and all parties involved in the transaction must agree to the terms.

• The buyer makes a deposit into the escrow fund, obtains a 100% loan, and then receives a credit back. This isn’t considered cash back at closing, because it is the buyer’s own money.
• When seller is assisting buyer with down payment and closing costs, earnest money can often be returned at closing.
• When buying an income property, if rents accrued and deposits equal more than the down payment and closing costs (perhaps with seller assisting with a portion or all of either or both), then those sums can often be given to the buyer at closing.

Note: In none of these instances is the buyer/borrower being paid proceeds from the mortgage loan that he or she secured to purchase the property, so these instances fall outside the scope of how I define “cash back at closing.”

Question: Can the seller pay the buyer cash back at closing to cover repairs to the property?

Answer: If a minor defect is discovered between the time when the purchase agreement is signed and the closing or final walkthrough, then it’s perfectly okay for the seller to reimburse the buyer for the cost of repairs. I’m talking a few hundred dollars at the most, not thousands of dollars.

For major repairs, such as a new central air conditioning unit, furnace, or roof, you have a couple options that are superior to handing the buyer cash:

• The seller can have the repairs completed prior to closing.
• The seller can place an amount of money in escrow equivalent to 1.5 times the amount of the estimated cost of repairs and have the contractor paid out of escrow. Once the repairs are completed, the seller is paid whatever remains in the escrow account.

The reason the seller shouldn’t just hand the money for the repairs over to the buyer is because then there is no guarantee that the repairs will be completed. If the repairs are not done, you end up in a situation in which the collateral that’s backing up the loan is defective. If the borrower defaults on the loan, the collateral is not worth as much as the lender assumed it was worth when it approved the loan.

Question: What if the seller includes furniture or other extras?

Answer: Quite a few people seem to think it’s okay for the buyer to agree to pay more for a home because the home is furnished or the seller agrees to throw in some extras, such as a car. When a buyer is borrowing money to purchase the home, however, this practice is unacceptable. I have seen cases in which the buyer has agreed to pay $30,000 more for a home because the seller agreed to leave furniture that was worth only a few thousand dollars at most. I don’t know who was on the receiving end of the extra money, but something certainly smelled fishy about that deal.

Of course, I have sold many homes in which one or two pieces of furniture or a couple appliances were written into the contract. These are items that the buyer requests and the seller agrees to include in order to close the deal. This is perfectly acceptable, but for the buyer to agree to pay significantly more for the home because the seller is including a few extras crosses the line.

Why are arrangements like this wrong? A couple reasons:

• A mortgage loan is secured by value of the home and the land it is on, not by the contents of the home or other extras that the seller throws in. If the homeowner were to default on the loan, move out, and take the furniture, the lender probably couldn’t sell the home for enough money to cover the balance of the loan.
• Paying more for a home than the true market value of the home artificially raises property values in the area. This makes housing less affordable for prospective buyers, increases property taxes, and makes for unstable housing markets.

Question: What if the home appraises for more than the seller is willing to accept for it?

Answer: I received the following question from a reader:

My wife is the buyer of a home. Seller will accept $280,000, the house appraises for $310,000. So, she offers $295,000 and the extra $15,000 is to be paid in real estate commissions to the buyer’s agent (me). Of course we disclose in the REPC we are husband and wife, there is a signed commission agreement, and it is disclosed on the HUD’s to the lender. There are no double contracts or HUD’s. I’ve earned commissions in the past buying my own property, but I also know an agent that the lender wouldn’t allow him to earn a commission buying his own property.

The key here is the phrase “Seller will accept $280,000.” Regardless of how much the home appraises for, because the seller agrees to take $280,000 for the property, that is the property’s sales price and it should be listed as such on the closing documents. If the appraiser had been notified that this was the net sale, the appraiser would have appraised the property for no more than $280,000. (Sometimes appraisers get dragged into the fraud arena because they are left in the dark.)

Question: Is cash back at closing okay if the details of the transaction are fully disclosed to the lender prior to closing?

Answer: This is a trick question. Most of the people who ask this question are actually not fully disclosing the details of the transaction to the lender. If they were, the lender would never approve the loan. What happens in many cases is that the con artists create two HUD-1 statements: one that discloses everything at closing and another, sent to the lender, that withholds important details. By including the details on one of the HUD-1 statements, the con artist convinces everyone that the details have been fully disclosed when they have not been.

In other cases, the HUD-1 may contain all of the details but someone pushes the loan through the approval process. Prior to the current mortgage meltdown, many lenders were so eager to have loans approved that they lowered their standards. Even though all the details of the transaction were disclosed at closing, the outcome was still the same: Lenders approved loans that should have been rejected outright. Some say that this is the lender’s problem, but we all pay the price.

Question: What if the seller agrees to accept less for the property at the very last minute?

Answer: Buyers will often sign a purchase agreement conditional upon the home passing inspection and then negotiate for a seller credit just prior to closing. They may ask for additional repairs, claim that their finances have changed, or provide some other explanation for why they need a credit in order to close. The sellers may be so tired of the process at this point that they agree just so the deal will close.

When situations such as this arise and the buyer and seller agree on a lower sales price, then the paperwork needs to be amended, the lender needs to be informed, and the loan documents and approval must be reworked. If the concession is not disclosed to the lender, then there is an issue. Buyers and sellers can negotiate whatever they want, but everyone involved in the transaction must be informed.

An agreement on an addendum is not sufficient to complete the transaction.

Have you had your annaul Termite Inspection!

BUG-OFF Termite & Pest Control Services recommend that homeowners have termite inspections on their homes annually, even if they don’t see any signs of termite damage. Homeowners should look at termite inspections as preventive maintenance. It is easier and less expensive to repair minor damage than it is to wait and suffer more serious & expensive structural damage to your home. Don’t let termites destroy the equity you have built up in your home and property!

Termites are responsible for billions of dollars of damage to the nation’s homes and other buildings every year. Because termites do their dirty work under the house, in walls and in other areas that are not readily seen, most homeowners don’t realize that they have termites. Homeowners may not become aware of the problem until they decide to sell their homes and a termite inspection is conducted. Repairing the damage done by termites and other wood-destroying insects could cost anywhere from a few hundred to thousands of dollars. Termites live in underground colonies and work 24-hours a day to destroy your home from the inside out. Termites can live in your home for several years with very few signs of activity.

Most homeowners’ insurance does not cover the cost of termite damage or other wood-destroying insect damage. Termite damage is found in about 25% of the homes inspected. That figure rises to about 50% in homes that are more than 20 years old and that have not had a recent termite inspection.

BUG-OFF inspectors look for tell-tale signs of termites, such as termite damage and shelter tubes along the foundation. Sometimes termite inspectors will see piles of discarded wings, a sign that the termites have transitioned through the swarming stage, when the king termites and the queen termites fly from their old colonies to start new ones – possibly in your home!

From Their Home to Yours

Don’t make a move without BUG-OFF Termite & Pest Control Services, for your “peace of mind” and ongoing home protection. The most expensive choice that some homeowners make is to choose to do nothing at all! Remember – termite prevention is cheaper than the cure!

Termite Inspection and Pest Control Services provided by Bug-Off. We help homeowners in Baltimore and surrounding counties to protect and maintain the market value in their homes, by conducting annual termite inspections. Wood-destroying insect detection may prevent extensive and costly structural damage to your home. Don’t let termites eat away the equity you have built up in your home and property! For the ongoing protection of your home’s equity, value and your “peace of mind”. It is very important to have an annual home inspection for termites and other wood-destroying insects. To get a free termite inspection estimate and save five dollars Click here or Call Bug-Off today.

Buying a house? Get a termite inspection!

If you are buying a home, the last thing you want is an expensive surprise don’t take chances……Before investing in a house in Baltimore Metropolitan area, be sure to have a termite inspection by our certified termite inspector. BUG-OFF Termite & Pest Control specialists can do a pre-purchase termite inspection for the house you wish to buy and we will give you an unbiased termite certification report on site.

Choosing the right termite inspector can be very difficult. Different inspection companies have varying qualifications, experience, training, reporting methods and yes, different pricing. One thing for sure is that a thorough termite inspection takes time, a lot of time depending on the size and complexity of the home inspected. Ultimately a thorough inspection depends heavily on the individual inspector’s knowledge, training and experience.

When you choose BUG-OFF Termite & Pest Control Services for your termite inspections, termite inspection reports and termite treatments you can be confident that you are receiving the quality service you expect and deserve from the termite & wood-destroying insect specialists you can trust.

BUG-OFF technicians are certified wood-destroying insect specialists with over 30 years experience and training in recognizing and treating signs of termite damage and other wood-destroying insect activity and damage in homes, garages and other structures. Our specialists have been inspecting and protecting homes in Baltimore, and the surrounding counties from termites and other wood-destroying insects for over 30 years. We attend annual professional workshops and special training, sponsored by the Maryland Department of Agriculture and the Maryland Pest Control Association to receive standard of the industry training in termite inspection, detection, and termite treatment.

 

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How Do You Get to the Top of Your Game?

How do you get to the top of your game? How do you take your place center stage in any profession or life’s ambition? Like all of those who have graced the stage of the historical center for performing arts, you must fine-tune your techniques, hone your skills, master your talents and study the subtle nuances to ensure that you not only succeed, but you also stand out for your commitment to excellence.It’s a new year and, in many areas, a turbulent time to earn a living. How will you let that affect you? Will you take the path of least resistance and simply leave the industry to find a “real” job? Or will you reignite your passion for a business that you love and customers who trust you and, like a true Maestro, raise your standards and perform to your highest ability? Make this your year to get to the Carnegie Hall of your profession by implementing these five principals for greatness:

What do great surgeons, craftsmen, musicians and — by the way — salespeople have in common? They practice their skills every day. They build on their strengths, quietly perfecting each one. They overcome their weaknesses by seeking new tools and techniques, learning from mentors and teachers along the way and truly studying their craft so that they can maintain a system of constant and never-ending improvement.

Rarely will you find successful people in any field who don’t fuel their lives or business with passion. They fall in love with what they do each day and seek out ways to better serve their customers, streamline their systems and bring their best selves to the table. A key ingredient in feeding your passion is to count your blessings daily. Another is to keep a crystal-clear vision of your goals in front of you. What do you truly want? Having a mental and physical picture of that goal can help you through a tough day.

“Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘Press On’ has solved and always will solve the problems of the human race.” Strong but true words left to us by our 30th president, Calvin Coolidge. How many of your counterparts have already given up? How many people do you know who have been in a “state of quit” for years? The races in life are won by those willing to stay in them — those who do not let fear, exhaustion, uncertainty or distance paralyze them. Go after your dreams with true grit and persistence!

How you view your days, yourself and your job can have everything to do with your success or failure. Do you live abundantly, with the knowledge that you deserve the very best that life has to offer? Do you seek first to solve problems as they present themselves, or do you wallow in the dilemma at hand? Are you caught up in the “bad market” speak that is so prevalent around the water cooler, or do you view this market as an opportunity to capture lost market share, share valuable insight with clients and develop the skills necessary to weather ANY market?

Oh, my … this is a tough one. I laugh with my youngest daughter when I tell her that patience is a virtue — it’s just not one that she has! It is easy in our world that is set at a quicker-than-lightning pace most days to lose patience with the people in our lives, the plan we designed to get us to our goals and even our own abilities. Those are the times when it is vital to slow things down, take a deep breath and remember that nothing lasts–not the good or the bad. Tomorrow will come right on schedule, and the events of today don’t necessarily have to bind us for life. Be patient … your turn will come.

If you truly wish this to be your year and want to live an exceptional life on your terms and in your time, mastering these five principles will help you go the distance. From practice, you learn to develop good habits and strong skills that make you a fierce competitor. From passion, you find yourself living and working with purpose, joy and a love for what you do that brings you both momentum and longevity.

Persistence ensures that you are still in the race long after the going gets tough and the weak get going. Perspective allows you to look at each challenge and see opportunity. It allows you to find the good in each day, each thing and each person and stay firmly on your path to success. Patience gives you peace of mind and enables you to better wait out the storms that inevitably move in from time to time.

I challenge you to get to the top of your game — to move in the direction of your dreams and find yourself center stage in your own production. How will you get there? Practice, practice, practice!

Pre-foreclosure

Have you ever heard the term pre foreclosure? Do you think that this means the same thing as a foreclosed home? If you answered yes to these questions you are not alone. But at the same time, if you answered yes you are not familiar with the advantages of buying pre foreclosures. Pre foreclosures are properties that are in the final stage before they are taken back by the bank.

This means that the owner is still in charge of the property but if they do not do anything to rectify their situation the bank is going to repossess the home.

There are many benefits that go along with buying pre foreclosures. The reason that many people miss out on these homes is because they have no clue what they are, or how to go about finding them.

The number one advantage of pre foreclosures is the price. Being that the owner has to sell the house before the bank takes it, they will be more inclined to listen to any offers that they receive. This means that it is not out of the realm of possibility to find pre foreclosures that are up to 50% off of the market value.

In addition to the great price that you can get on pre foreclosures, you will also be able to deal directly with the owner. This is an advantage because the buyer is in the driver’s seat during a pre foreclosure deal. If the home owner turns down your offer and fails to sell the property, they will end up losing everything. But they know that if they sell the home they may at least end up making back a little bit of money if there is enough equity in the home or at the least not have a foreclosure on on their credit report. If you know someone in Maryland in need of assistance due to pending legal action against their property I may be able to assist them. I’m a foreclosure consultant in the state of Maryland.

Loan Process Overview

Hot Market: Maryland Mountains Heat Up

Out of towners are flocking to Alleghany County, Maryland. Rolling mountain views, a slower country lifestyle and recreational opportunities are making Maryland’s least expensive housing market to suddenly heat up. More than 40 percent of houses purchased in the area are by buyers who live elsewhere, according to the county’s website.

While surrounding regions are watching prices flatten or fall, the residents of Cumberland, Maryland — which sits by the Potomac River — has seen price increases throughout the year. The National Association of Realtors reports single-family home prices for the 4th quarter 2007 are up a whopping 19 percent compared to 4th quarter 2006. Month after month, the prices have edged up anywhere from a few percentage points to more than 20 percent on an annual basis.

County leaders have marketed the area’s land affordability and ready and available work force to take advantage of three state enterprise zones designated for the town of Cumberland. They have focused their efforts in developing information technology, biotechnology and advanced manufacturing business parks to draw even more economic growth.

Meanwhile, prices keep moving upward. The average price of a single-family home in 2007 was $118,000, up nearly 10 percent compared to 2006. The median price was $102,000 — up nearly 15 percent from a year ago.

You must register Baltimore Co. rental properties and be licensed on or before July 1, 2008.

On December 19, 2007 the Baltimore County Council passed Bill 87-07 requiring that all buildings or a portions of a building that contain one to six dwelling units, intended, or designed to be rented, leased, let or be hired out to be occupied for living purposes be registered and licensed with Baltimore County.

Purpose: To establish a licensing program in the county in order to create an additional procedure for the enforcement of county codes and regulations to protect and promote the:

• public safety
• health and
• welfare

2. You need to have the home inspected. A ‘home inspection” requires the inspection sheet (PDF – to be completed and signed by a licensed inspector) for the compliance of one or more of the components of an existing residential building with the health and safety requirements established by the Director.The Home Inspector must be licensed with the Maryland Department of Labor, Licensing & Regulations.

3. Return the following together:Rental Application (PDF) – complete
   Applicable lead inspection certificate
   Inspection Evaluation Sheet (PDF) – completed by licensed home inspector or Registration Exemption Affidavit (PDF)
   Application fee (on application), with payment coupon (PDF)Note: Original signatures must be in Blue Ink.
   

   
   

4. These items are then forwarded to the Code Enforcement Bureau for review.
   
5. Upon review and approval, the Bureau of Code Enforcement will register the property and send you the license.
6. You must renew every 3 years and you must have the property re-inspected upon renewal.
   

Forms (PDF) are also available at all public libraries and senior centers, or Room 213 County Office Building- Bureau of Code Enforcement, 111 West Chesapeake Avenue, Towson, MD 21204.

What will the home inspector look for?

A.

• Smoke detectors
• Electrical system – no apparent visual hazard(s),
• All plumbing is functional – with no apparent visual hazard(s)
• All windows operational – all windows designed to be opened are operational
• All combustion appliances are properly vented (i.e. furnace, hot water heater, dryer)
• Secondary means of escape from sleeping areas exist – no exterior health or safety hazards

The Inspector Guide Checklist is a comprehensive draft of things the inspector will check for.

INSTRUCTIONS FOR LIFE

1.	TAKE INTO ACCOUNT THAT GREAT LOVE AND GREAT ACHIEVEMENTS INVOLVE RISK
2.	WHEN YOU LOOSE, DON’T LOOSE THE LESSON
3.	FOLLOW THE THREE R’s RESPECT FOR SELF RESPECT FOR OTHERS and RESPONSIBILITY FOR ALL YOUR ACTIONS
4.	REMEMBER THAT NOT GETTING WHAT YOU WANT IS SOMETIMES A WONDERFUL STROKE OF LUCK
5.	LEARN THE RULES SO YOU KNOW HOW TO BREAK THEM PROPERLY
6.	DON’T LET A LITTLE DISPUTE INJURE A GREAT RELATIONSHIP
7.	WHEN YOU REALIZE YOU’VE MADE A MISTAKE, TAKE IMMEDIATE STEPS TO CORRECT IT
8.	SPEND SOME TIME ALONE EVERY DAY
9.	OPEN ARMS TO CHANGE, BUT DON’T LET GO OF YOUR VALUES
10.	REMEMBER THAT SILENCE IS SOMETIMES THE BEST ANSWER
11.	LIVE A GOOD HONORABLE L IFE. THEN WHEN YOU GET OLDER AND THINK BACK, YOU’LL BE ABLE TO ENJOY IT A SECOND TIME
12.	A LOVING ATMOSPHERE IN YOUR HOME IS THE FOUNDATION FOR YOUR LIFE
13.	IN DISAGREEMENTS WITH LOVED ONES, DEAL ONLY WITH THE CURRENT SITUATION. DON’T BRING UP THE PAST
14.	SHARE YOUR KNOWLEDGE. IT’S A WAY TO ACHIEVE IMMORTALITY
15.	BE GENTLE WITH THE EARTH
16.	ONCE A YAR GO SOMEPLACE YOU’VE NEVER BEEN BEFORE
17.	REMEMBER THAT THE BEST RELATIONSHIP IS THE ONE IN WHICH YOUR LOVE FOR EACHOTHER EXCEEDS YOUR NEED FOR EACH OTHER
18.	JUDGE YOUR SUCCESS BY WHAT YOU HAD TO GIVE UP IN ORDER TO GET IT
19.	APPROACH LOVE AND COOKING WITH RECKLESS ABANDON

5 Ways to Raise Your Credit Score – And Fast

If you are looking to improve your credit score quickly, now is the time to get started. Give us a call. We’ll have a seasoned professional review your credit and find out exactly where you stand and where you need to get to. In the meantime, here are some great strategies you can utilize right away to give your score a little boost.

Create Some Balance: While paying down installment debt (car, school, mortgage, etc.) will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.

Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.

Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don’t report your information to all three credit companies – this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you’re in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.

Protect Your Interests: Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it’s listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it’s important to monitor your credit every four to six months.

Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau’s website and file a complaint online. If supporting documents are necessary, you have to file your dispute by mail.