The Effect of a Deed in Lieu on Credit

Foreclosure

Mortgage loans become delinquent after a payment has not been made for 30 days. The lender can file a foreclosure proceeding on delinquent loans they service. Generally, most lenders begin this process after a 90-day delinquency. Foreclosure proceedings are lengthy and costly to the bank and are usually avoided, if possible. Homeowners, or borrowers, facing foreclosure are faced with a few options after entering the delinquency period of a loan. If these do not work, the bank will legally obtain ownership of the property.

Options

The borrowers can begin to mend the loan status by reaching an agreement with the bank. A loan modification program may be available to those homeowner's experiencing extreme financial hardship due to unforeseen circumstances. Another option is to pay the amount owed, plus penalties and interest to the lender. The third option is to sell the property at a short sale. Potential buyers can place a bid on the property for generally less than the fair market value of the home. If the lender agrees to it, then they receive the profit from the sale. Another option to avoid foreclosure is using a deed in lieu. By using this method, the borrowers willingly deed the property back to the bank. Generally, banks would like the homeowners to put the property on the market for a few months in an attempt to sell, so that they receive cash, rather than a property.

Impact on Credit

According to CNN Money, the biggest impact on a homeowner's credit score is the first delinquency. A missed payment can cause the credit score to drop 40 to 110 points, dependent on other factors. The credit score will continue to drop with each missed payment. Eventually, a deed in lieu of foreclosure could result in the loss of 85 to 160 credit points. A foreclosure filing typically sees the same general range of loss. This option is viewed by creditors as a serious delinquency on the credit history.

Considerations

Deeds in lieu and foreclosures can remain on the credit report for 7 years. At this time, a request must be made to the credit bureau to remove the foreclosure from a credit report. A bankruptcy, however, will remain on the credit report for much longer. Chapter 13 bankruptcy involves a 7-year repayment plan plus 7 years to be removed from the credit report. Chapter 7 bankruptcy remains on the credit report for 10 years. Although a serious delinquency on a mortgage loan impacts credit seriously, a deed in lieu may be a better option than bankruptcy.

Impact on Credit Score When Opening a New Credit Card

New Credit Cards

When a person takes out a credit card, she is essentially opening a line of credit with a credit card company. After the card is issued, the company that issued the card will report to credit reporting agencies that it has offered the borrower a new line of credit. Depending on a number of factors, including the person's previous credit history and the size of the line of credit, the borrower's credit score will be affected in different ways.

Short-Term Effects

In the short term, a new credit card can either help or hurt a person's credit score. Credit scores are determined using complex secret formulas, the precise nature of which varies between credit reporting agencies. Generally, the higher a person's debt-to-available-credit ratio, the lower the person's score. Taking out a new credit card, which makes more credit available, can raise this score. However, according the Fair Isaac Corp., the company that helped invent the modern credit score, taking out too many credit cards can cause a person's score to drop.

Long-Term Effects

How a new credit card will affect a person in the long term depends on how the borrower uses it. If a borrower quickly racks up a large amount of debt on a credit card, his debt-to-available-credit ratio will rise and his score will be lowered. However, if he makes his payments on time and in full, the borrower can help establish a good credit history, leading to a better score.

Credit Checks

When a lender checks a person's credit after she has filled out a loan application, such as for a new credit card, her credit score will generally drop a few points. This is because credit reporting agencies take these kinds of credit checks as a sign that the person is getting ready to take on more debt. This suggests that she may be at a higher risk of defaulting on current loans; therefore, her score is lowered.

How Is Credit Rating Evaluated?

Payment History

Your payment history is the single most important factor in deciding your credit rating. It accounts for 35 percent of your rating. If you are late on your payments, it will affect your score negatively. Conversely, if you always make timely payments, your credit rating will increase. The exception to this rule is for any grace period given to you by the financial institutions. For example, many lenders stipulate a 10 to 15-day grace period on late car payments. This means you can pay 10 to 15 days after the due date without the credit bureaus receiving a late payment report.

Amounts Owed

Your amount owed or total amount of debt, is the second largest contributing factor and accounts for 30 percent in determining your credit rating. The more debt you owe, and the more credit you convert to debt, the worse off your credit rating is. Since amounts owed accounts for your total debt, you can't easily lower some of your existing debt, such as car payments or mortgage payments. You can, however, use your credit card less often and use less of your available credit. MSN Money central advises using 30 percent or less of your credit card limit each month to avoid penalties to your credit rating.

Length of Credit History

Accounting for 15 percent of your credit rating, the length of your credit history has less of an impact on your scores than your payment history and amount owed, but is nevertheless important. An old credit account of at least six months in good standing is always better than a new credit account in good standing. New credit accounts themselves do not affect your credit score, but a lack of established credit negatively affects your rating.

Opening New Credit Accounts

Establishing credit is important when building your credit rating, but opening too many accounts at one time will have a negative impact on your score. The amount of new credit accounts must remain proportionate to your already established credit accounts so your score will not go down. For example, if you have a mortgage, auto loan and five credit cards, opening two new credit accounts will usually not harm your score. If you only have one credit card and open three new credit accounts, your score will suffer. New credit affects accounts for 10 percent of your rating.

Types of Credit

At 10 percent, the type of credit you use has the same impact on your credit score as new credit. Credit card accounts are good for building your credit score, but having too many will negatively affect it, and credit cards do not have as much of a positive affect as other credit, such as a mortgage. Auto loans also rank higher than credit cards. If you consistently make your payments each month, you will see a larger increase on your credit rating from a mortgage or auto loan than you will from your credit card accounts. Retail cards are the lowest form of credit, although they are good to build initial credit.

What Qualifications Do You Need to Achieve As a Veterinary Technician?

Job Duties

Veterinary technicians assist veterinarians during examinations, treatments, surgery and dental procedures. They provide specialized care for pets that may include administering medication and other treatments. Vet techs draw blood and perform laboratory tests on blood samples, urine and feces. They record each animal's health history and problems by talking with the pet owner.

Training

Most veterinary technicians complete a two-year associate degree from a vocational college program accredited by the American Veterinary Medical Association, as noted by the U.S. Bureau of Labor Statistics. Courses include classroom, clinical and laboratory work, and students gain experience working with animals. Not all states have specific educational requirements, and some veterinarians hire techs without a degree.

Credentials

States vary in regard to their regulation of this profession, and some are much more stringent than others. Depending on the state, veterinary technicians may need to become certified, licensed or registered. In New York, for instance, aspiring vet techs must become licensed after completing a high school program and a two-year diploma or degree in veterinary technology registered by the New York State Education Department or accredited by the American Veterinary Medical Association. The BLS advises that veterinary technicians wanting to work in a research facility are likely to need certification by the American Association for Laboratory Animal Science.

Skills and Personal Qualities

In addition to technical skills, veterinary technicians need excellent communication skills because they work not only with pets but pet owners. Some vet techs have more contact with pet owners than the veterinarians do. Veterinary technicians typically must be good at working as part of a team, and they need organizational skills and a keen eye for detail. Importantly, veterinary technicians must have the emotional strength to deal with unpleasant situations involving severely injured pets, animal abuse, euthanasia and distraught pet owners.

Continuing Education

Some states require continuing education for veterinary technicians. Nebraska, for instance, requires vet techs to complete 16 hours of approved additional training or coursework every two years.

Requirements for a 750 Credit Score

Pay on Time

Pay all of your bills on time. The largest negative effects to your FICO score are from delinquent payments.

Keep Debt Low

The FICO score takes into account how much available credit is actually in use. If you are near or at the credit limit on your credit cards, you will be considered a greater loan risk than someone who keeps their credit debt low. Try to maintain your credit card debt at less than 10 percent of available credit.

Old Credit Cards

Do not close out old credit card accounts, especially if you are not using them. Two positive effects to your FICO score are long-term available debt and a small debt-to-available-debt ratio. That old, unused credit card account works for you in both ways.

New Credit Cards

The more times you request a new credit card, the more negative dings to your FICO score. Decline that offer for a new store credit card that saves you 20 percent on only today's purchases.

How Are Points Added to Your Credit Score?

Remove and Prevent Negative Items

Removing negative items from reports will increase scores. Negative items, such as late or missed payments, not paying the full amount due and repossessions, will lower a credit score. Negative information will be removed from a report in time -- seven years for a late payment -- but the credit bureau will remove erroneous information if you prove a disputed item. Negative items lose their impact over time but affect your score until they drop off your report.

Lower Outstanding Debt

Lowering the amount you owe on debt accounts will add points to a score. The credit bureaus look at the amount of credit a consumer has available compared to how much he owes on those accounts and whether he is reaching his balance limits. Lower balances reflect a cautious use of credit and can raise your score. The amount of debt you have compared to available credit makes up a good part of your credit score -- about 30 percent of your score reflects your credit utilization. To add points to your credit score, use your credit cards less frequently and make more than the required payment to lower the balances.

Long Credit History

Credit bureaus look at how long you have had credit when determining your credit score. The longer a person has had good credit, the lower the risk that the person will quit paying her bills. The amount of time that you have maintained accounts can make up 15 percent of your score.

Lower the Frequency of Asking for Credit

The more credit you apply for, the lower your score. Credit bureaus assume that if you are applying for many different lines of credit you need access to money, which could make you a credit risk. New credit inquiries will remain on your report for two years and new accounts can comprise up to 10 percent of your score.

Pay on Time

Consistent timely payments are mandatory to add points to a credit score. Paying your bills every month shows the credit bureaus that you are not over-extended and able to meet your current obligations. Your payment history can attribute as much as 35 percent of your score, which makes paying on time a key path to a high score. If the payment falls at a difficult time of the month, your account provider may be able to change the date.

How Long Is a Mortgage Default on a Credit Report?

Missed Payments

Each lender maintains its own standard regarding how many missed payments constitute a mortgage default. Regardless of how many payments you missed before and after your lender declared your loan in default, each missed payment remains a part of your credit history for seven years. In addition, missed payments have a more significant derogatory effect on your credit rating than any other single factor.

Losing the Home

If your mortgage default resulted in a foreclosure, the legal record reflecting the foreclosure appears on your credit file for seven years from the date the foreclosure occurred. Because foreclosure occurs after you miss several loan payments, you can expect a foreclosure record to linger within your credit history for slightly longer than missed payment records -- even though the record adheres to the same seven-year reporting period.

Mortgage Deficiency

If your home is worth less than your lender can recover at the foreclosure auction or through a private sale, you still owe your lender the difference between the sale price and your loan balance. Depending on the statute of limitations for debt collection lawsuits in your state, your lender may have up to 10 years to sue you for this deficiency. After it wins the lawsuit, a record of the court judgment connected to the original default appears on your credit report for an additional seven years. Because a court judgment's reporting period begins on the date the judgment was awarded, your credit report could reflect evidence of your defaulted mortgage for much longer than seven years after you stop making payments.

Credit Reporting Exceptions

If your lender agrees to work with you and allow you to redeem your defaulted mortgage, it may also modify any previous negative reports to the credit bureaus. Although many lenders refuse to modify consumer credit reports, some lenders will agree to do so in exchange for payment. It is more cost-efficient for a lender to allow you to redeem your home rather than seize it through foreclosure. In addition, if you successfully dispute negative information related to your mortgage default with the credit bureaus and your lender does not verify the information's accuracy, the Fair Credit Reporting Act states that the credit bureaus must delete the disputed information from your credit history -- resulting in derogatory reports related to the mortgage default disappearing before the reporting period expires.