Bisendra Melaram: [00:00:00] Welcome back, Castle Dwellers, to Keys to the Castle. Today, we're tackling a topic that keeps many first time homebuyers up at night. Credit. Owning your own place feels like a distant dream if your credit score isn't singing the right tune. But fair not, because we've got the key to unlocking that dream.

Joining our legal eagle, Jason Kleiger, and mortgage maestro, Jason Marcus, is the credit repair fairy godmother herself, Angela Kim, senior credit counselor with Credit Repair Boss. I'm Bisendra Melaram, your real estate pro. Let's unlock your dream home together. Angela, welcome to the show. Thank you for having me.

Welcome Angela. Angela, Angela, Angela, lady of the hour. We got some big questions about credit for you today. 

Angela Kim: Yeah. A lot to talk about. Yeah. 

Yeah. So 

Bisendra Melaram: tell us a little bit about yourself and how you got started in the credit repair. Is it a business? is it considered a business? 

Angela Kim: Um, it is, it is considered a business.

So I got involved in the business, 11 years already. So, um, someone who's like my aunt started the company, my dad got involved as a partner, so it's been fun 11 years so far. 

Bisendra Melaram: Oh, [00:01:00] family business sounds like a lot of fun. Do you and your family members butt heads a lot? 

Angela Kim: Little bit, but it's for the good, for the growth of the company, so.

Bisendra Melaram: Okay, sounds good, sounds good. You want to start us off with a little, uh, horror story? Or a success story? Other than being here. I'll 

Angela Kim: talk about what happened with my client this morning. Um, a lot of clients are trusting Credit Karma as if it's the Bible. So, um, I had a client call me today, um, introduced by a mortgage broker, and she thought her credit score on Credit Karma was a score on, um, The FICO report for mortgage.

So they don't know that, um, Experian is one of the bureaus that obviously when you're getting a mortgage that you look at, they don't give you that Experian. There was a big charge off account. Um, the client never paid a car. They took the car back, which is called voluntary repo. So there was a 30, 000 debt sitting on there.

She never knew about. So, um, [00:02:00] yeah, we have to rectify that before she buys a home, but don't trust Credit Karma or any kind of credit monitoring app too much. Um, it's one of the most asked questions these days because they're pushing out a lot of Interesting. 

Bisendra Melaram: So talking about apps, there's a lot of information about credit repair floating around the internet via apps like TikTok and stuff like that.

So hopefully you can clarify some of that information for us. Um, lend some clarity to our listeners. so you also mentioned purchasing a home and the mortgage maestro is here today and he's going to lean on you a little bit. We're going to coerce him to do that. So, tell us a little bit about the terminology, specifically how it applies to someone who's now starting their journey and figuring out like a story, like the story you just depicted that is now figuring out, Oh wait, my credit's not reporting the way I want it to report.

So, what are some first steps that you would recommend, or Credit Repair Boss would recommend them do? The first 

Angela Kim: step would be actually taking a [00:03:00] good look at your three bureau report. So, you can't just go off of one bureau, but you actually have to take a look at all three. So, if there's a problem on one, likelihood is it's going to report on the other two, too.

So, check credit. Really good to speak to Jay to get pre qualified, which would Be the first step but um, if there are any inaccuracies on your credit If there was a collection slash charge off that you paid back a couple years ago So sitting on there then that has to be rectified or you know You went through hardship because of covid or coming out of covid.

You were a small business owner. You were affected then Gotta negotiate and take care of that debt and get it off the report get your credit score back up so you can get Mortgage and hopefully at a much better rate than where you started off at Credit score 520 

Bisendra Melaram: Oh, that's bad. Sorry. So, so what's the, just for my own knowledge, because Mr.

Marcus will never divulge this information. What's the, what's the lowest? This, just for information and entertainment purposes only. [00:04:00] What's the, the lowest score you've seen? 

Angela Kim: You'll be shocked. 399. So lowest credit score I've ever seen. I didn't even know they went below 500. I thought it was 

Bisendra Melaram: 500 was the bottom.

Angela Kim: Well FICO is a little different. I usually look at credit on Vantage first. I've seen it as lowest 399. So perfect credit score is 850. I've seen 849. I've seen it as lowest 399. Which is nowhere near where you need to be in order to get a mortgage. 

Bisendra Melaram: Yeah, no. 

Jason Kleiger: That makes me feel better about my score, which I will not say.

But Seeing that there is a 399 and that's not me, makes me a little happy. 

Bisendra Melaram: The highest score I've ever seen was 839. And that was my father, and that man was 

Jason Kleiger: Chasing that 850. 

Bisendra Melaram: Yeah, he never missed a payment. He was paying stuff early. He was splitting payments in half, and like sending it when it was due.

It was nuts. 

Angela Kim: There are a lot of different tricks. Probably your dad was doing the statement date [00:05:00] versus the due date. Yes. So he probably broke it into two and paid on the due date and also the statement date which is a date in which that they report to the credit bureaus. A lot of people do do that but it's, helps better than not paying your bill on time.

But it doesn't really do that much of a boosting. It's more so just generally building credit. You can't have perfect credit score with just Paying your credit cards on time. That probably had a lot of different credit. With big limits. Yeah. 

Jason Marcus: Right. 

Bisendra Melaram: So that gets us into what I know, what I know as credit utilization, right?

So the person, let's take the story that you depicted of 399. What would you recommend for that customer of yours? If they talked to Jay, Jay was like, let's call Angela. Let her fix you up. You look at the report. They got 399. They want to buy a house in. What's the average turnaround, six months? 

Angela Kim: No, a lot quicker, depending on how Quicker?

Bisendra Melaram: Okay, because I tell people three to six months. Okay, so I like to work in worst case scenarios, because I don't like surprises, like [00:06:00] 399. So, so the person has 399, Jay sent them over to you, what's your plan of action? Just very broad strokes overview. Yeah, 

Angela Kim: let's start with um, average credit score that I'm seeing, which is like 5.

30. So let's start, Okay. saying that this client A has credit score of 530. Um, so probably the client has a lot of old debt, meaning collections, charge of accounts, like I see Macy's account all the time on the credit. You get, you know, lured into opening that card cause they're giving you initial 30 percent off and people get hooked.

But what happens is it's not a major bank that you check the app on every day, you miss a payment and boom, it drops your credit by a hundred points. Seeing that a lot. So, First step would be actually taking a look at credit. So, um, every time I sit down with a new client, we pull credit that would hold all the answers to how long it would take to fix your credit and everything involved.

So if you have a lot of old debt, then we need to rectify them. But most important thing is to be able to tell you you need to have at least three credit accounts of your own to qualify for [00:07:00] mortgage. So what's does that mean? Just because you get one collection off. One other collection off with medical bill doesn't automatically boost your credit score up.

So we probably have to build a client's credit score to probably 680. The client wants to get a FHA mortgage. I would love to have them put only three and a half percent down and a lot of people don't know that your credit actually has to be better than 580. Below 580 you have to do a lot more down, which is 10 percent and no one wants to do that.

So be cleaning up credit, rectify it and building it back up. 

Bisendra Melaram: Okay, so that process you're saying takes less than six months. 

Angela Kim: So, really depends on what problem they have. Um, it could be as fast as a month. Legally, the credit bureaus are supposed to update your credit every 35 days. Um, turnaround time is usually around like two months to three months.

Heavier files could be, you know, You have to pay the client as long as six months, depending on whether they're ready or not, how committed they are to buying a house. But if the client's committed, then we can [00:08:00] fix credit a lot faster, build them up, get their credit score to where it needs to be. 

Bisendra Melaram: That sounds really good.

Mr. Kleiger, you look like you had something to say. 

Jason Kleiger: No, I'm surprised that it takes, you know, it doesn't take that long because I've been in situations where, let's say I have a car. Um, and I have a 35, 000 loan, let's just say. My Mazda, I love it. Um, I have a 35, 000 loan, and then let's say I come into money and I want to pay that off, and then I still see it, and I still see it, and then, you know, I'm a very nervous person, so it'll be two weeks, and I'm expecting it to come off.

So, that makes me feel better that it actually doesn't take that long, and me being neurotic and thinking that, hey, this should come off instantly, Uh, now I have better expectations. 

Angela Kim: Yeah, so that's why Credit Karma gets a lot of people, and that's why they're investing millions in ads. They alert you almost every single day.

Uh, your credit score went up 100 points, it dropped 200 points, but is that really possible? Not really. You [00:09:00] update your credit score every month to the Bureau, so it takes around at least a month, 35 days, to take a look at your next credit report. 

Bisendra Melaram: Hmm. So Mr. Kleiger, are there any legal implications for having other than charge off accounts and stuff like that?

Because I'm thinking more in lines of mortgages where there's a deficiency judgment and stuff like that. And I'm going the total wrong way. I know I am, but it makes, that's why I'm asking you. 

Jason Kleiger: Oh, no, no. I mean like, you know, it comes into play all the time. You have situations where there's a mortgage contingency.

in a contract where they have to get, you know, an 80 percent conventional mortgage. What do you think, you know, goes into that? What do you think is a factor? Uh, and a lot of times you're making representations in contracts saying, you know, I know of nothing that would prevent me from getting this loan.

And one of those things, obviously, we know is, is credit. So, and then there's also a situation where you get the commitment, so you've [00:10:00] satisfied that mortgage commitment contingency, now you can't back out of the contract, you know, for that reason. Um, and then all of a sudden you're like, alright, cool, I got my commitment, I'm gonna go to Macy's, open up a card, go crazy, uh, I'm not gonna pay my car payment anymore because I'm excited I got my commitment, they're gonna fund the loan.

And that's a very dangerous game. 

Bisendra Melaram: How dangerous? 

Jason Kleiger: Well, if you get your commitment, and then you Decide okay, I'm just gonna blow all my money. Okay, um, you know, whatever's on hand not not cash on hand Whatever credit card limits that you have you're going to max them out because you already got your commitment.

What do you care? And then all of a sudden After your commitment, but before the loan funds They pull it. All right, so you're already locked into that contract and now because you just tanked your credit And you brought out all these credit cards and you went and bought a lamborghini for some reason You using a loan, next thing you know, uh, you know, we're in between that commitment pay [00:11:00] and the funding loan.

And that's the place you do not want to be. 

Bisendra Melaram: I tell every buyer, do not buy or do anything without calling Marcus first and running it past him. And even if he tells you, yeah, no problem, still don't do it. 

You 

Jason Kleiger: know, whenever I consult, whenever I consult clients who are signing a contract, that's my number one thing is I tell them, don't buy anything big.

I was like, don't take on debt, don't, you know, rack up credit card debt, don't, don't spend whatever limits you have, because it's going to, it's going to come back. Yeah, you 

Angela Kim: don't want to touch your DTI while you're trying to close on that mortgage. 

Bisendra Melaram: Well, I learned that the hard way. 

Jason Kleiger: Uh oh. Go on, Bisendra.

Yeah, 

Bisendra Melaram: I learned that the hard way. Very early in my career, I was working on a transaction with a buyer. he had inherited some money and we told him, hey, maybe now is a good time. You know, he was professional. at the time, I think he was a sanitation supervisor for, New York City. He had come into a large sum of money [00:12:00] and we told him now would be a good time.

To get some property had great credit score. I'm just gonna stretch back 720 

REALTOR: ish 

Bisendra Melaram: Bought a three family Commitment everything good to go The morning of where he was supposed to pick me up and take me to the closing pulls up in a brand new escalade brand new escalade so i'm like whose car just this he's like, it's mine.

I'm like, what? What happened? He's like, no, you know, I got a little money left over from buying the house. I'm like, but you didn't buy the house yet. So I'm having a conniption in the car. conniption, not saying anything. I'm saying to myself, is this thing going to fund? If this thing is going to fund, is this thing going to fund?

I should have drove myself. That's all I kept telling myself. We get to the closing bank does what they always do. The morning of they run it again and guess who doesn't qualify because they bought a brand new Escalade. And I tell people [00:13:00] education is expensive. And you know who I blame for that? Mr.

Marcus. Because he wasn't my loan officer, and he didn't call me and warn me that this guy was up to nonsense. Yeah, 

Jason Marcus: I wasn't in existence, so. Well, I existed, but. Not in that world. Not in that 

Bisendra Melaram: world at that time. So have you seen, Mr. Marcus, anything like that happen to you? 

Jason Marcus: Yeah, I mean, it's a lot of times just frustration.

Like, you'll get those people that do that, but sometimes it's just, it's not even, Hmm. Them doing something ridiculous like that's ridiculous. That was ridiculous. Yeah, sometimes it's just like they don't know and I'm sure we're gonna be able to touch on this so People thinking that I guess we got to get into just how This kind of gets and what I'm about to talk about is the difference between installment versus revolving so you sit [00:14:00] there and you have three credit cards that have 1, 000 limit, and you basically have 1, 500 of debt against those three credit cards.

Okay. But all of a sudden you get this ad where it's like, Oh, open up this credit card for a 2, 000 limit with 0 percent interest for a year. Now you took that 1, 500 of debt and you moved it onto that 2, 000 credit card, but you shut down those other three credit cards. Now that you've just. changed the amount of debt that you have, which is a percentage and you, well, we, I always refer to it as a 50 percent rule when you sit there and you put more than 50 percent against any given card, it's getting rated.

And you can correct me if I'm wrong. It's getting rated two ways. It's getting rated by the account itself, and it's getting rated as a whole. And now you did something that you thought was wrong. [00:15:00] economically intelligent. It's like, wow, I just moved 1, 500 of debt that might have been going against a 20 percent interest rate.

Now it's at a 0 percent and you're not thinking you did anything wrong, but your credit gets run and your scores just dropped 100 points. You weren't late. You didn't do anything ridiculous, but you've changed that ratio. That debt ratio on your credit report and it has had a major negative effect So i've had that happen where it's like, oh my gosh And it's one of those things where education would have solved that problem They thought they did nothing wrong and in all technicality They did nothing wrong.

There wasn't a late payment. There wasn't adding any debt They just saw that they did something intelligently, but without knowing the rules to the game They're trying to run to third base when i'm, sorry, you gotta run the first So, I've had that happen on revolving credit where that's a problem. 

Angela Kim: When, um, anyone asks me for two tips on credit, I say the first thing is don't ever close your credit card.

So, a lot of the times, the oldest credit card [00:16:00] that you never touch is probably the best credit card on your credit. It's kind of like working as a pillar on your credit report. So, if you went ahead and closed your 20 year old credit card that you first took out during orientation in college, it's Of course your credit is going to drop and in this situation that Marcus mentioned, out of three credit cards, you close every single one of them and you open a brand new credit card.

Guess what you just did? You averaged out your credit history to a month old. You shut down every single credit you've ever built. So don't ever close your credit cards. If you don't use it, what I always say is, um, put your groceries on that card, put, you know, automatic bill for your insurance or whatever it is like phone bill that that history.

You know, run itself and build itself, and if you don't use it a lot, then maybe rotate on, you know, Q1, January to, um, March. Use this one credit card exclusively, and then move on to your second card. Third card, use that at the latter part of the year. So it's a good way to kind of leverage credit. [00:17:00] Banks always love seeing people who've had great experience.

dealing with other banks. It's funny, but I always use this analogy. It's kind of like dating. So if you've gotten rejected by one bank, chances are they're not going to give you more credit because they don't like how your credit looks. But if a bank already likes you, you're going to have a very nice 30, 000 credit card with Chase, then guess what?

You should build the relationship with them, grow it until 50, 000 or 70, 000 credit card. So banks are relational, so keep that credit card open. 

Bisendra Melaram: I think I still have my first credit card. 

Jason Marcus: I have my first credit card. Oh, good. I don't know. I mean, it's 

Bisendra Melaram: evolved over the years. Yeah, it's changed. It's changed.

Mine 

Jason Marcus: went through Chase, but it was like that. You gotta treasure it. Chase freed me. Treasure that card. 

I 

Bisendra Melaram: don't know. I had a call, I had a call with 

Jason Kleiger: Amex the other day, and they were like, oh, you know, thank you for being a member for 20 years. What? Yeah, and I was like, 

Jason Marcus: what? Well, let's talk about them as our problem, because they are my problem, okay?

So, Amex sits there and comes out, and they're [00:18:00] like, hey. You got unlimited, but that doesn't mean that that's how they report to the credit bureaus. They report whatever the most you had against that card as their high limit. So if you happen to come to me and you just happen to have the highest balance you've ever had on your Amex, your credit score is a lot lower than it should be because again, on paper, it appears like as if you have a maxed credit card.

And it's weighing them down. I had a problem with Amex with that. I still have a problem with Amex with that. They continue to do that. But you know who I had a problem with? Where they finally changed it, but early in my career, and this may predate your involvement in this, was Macy's. Macy's was putting high limits at zero.

So it's like, you would put 100 on that card, and you had like a ratio of 110 percent against that card, and it's like, oh my god, their credit would be 100 points, 150 points, and they did nothing wrong. All they did was open up a [00:19:00] Macy's store card and it was just how they were reporting. 

Angela Kim: Yeah, DTI really affects people, so.

want to be at least 30 percent below the limit. So I'm always on the safe side. So I like to be under 20 percent of each limit, but charge cards, like one of those platinum credit cards, they can kind of confuse a lot of people just because you don't have a limit. It doesn't mean you don't have a preset limit, which is the max you've ever used on a billing cycle.

And a lot of the times those credit cards, you can't stretch out your payments. You have to pay in full unless there's a promotion, but. And perks, but also cons. 

Jason Marcus: No matter how many presentations I give about mortgages, and I've done a gazillion of them, every single person in the audience only cares about when I talk about how credit works.

That's the only thing that they care about. I will get ignored by 95 percent of the people on every topic that I'm talking about. I start talking about like how credit gets weighed and all of a sudden it's just like I [00:20:00] have the undivided attention of every single person in 

that 

Angela Kim: room. I think it's also because our education system is not great A lot of clients make mistakes and learn from it.

We should really educate our children 

Jason Marcus: I mean, how are you not what well, I mean, I think it should be in a high school but as we you've kind of mentioned before that Those credit card booths are set up Freshman year on the quad Just in hey, you know open this up. Nobody has any idea I took so many different clubs.

I can tell you guys out there how to build a space station on Mars From freshman year, but I can't tell you how credit works 

Bisendra Melaram: But you know you get that Cousy for your beer when you fill out the application. Yeah, I got a squishy bowl. I got so many cool things. A frisbee, a frisbee. I got a 

Jason Marcus: frisbee. Yeah, yeah, like, um, [00:21:00] I, I apologize to the listening audience.

I do not, and I, this has to be a disclaimer, do not remember how to build a space station on Mars.

Bisendra Melaram: So wait, let's get back to some of that terminology or acronyms that we use DTI. I mean, I know it's debt to income, but how does that factor into the average consumer? how, what is DTI number? Should they be looking at if they're looking at their credit card statement or in the case of credit karma, which we don't really advocate for here because I don't think it's accurate in the least.

It's just a tool that people, because people like to touch buttons and touch, tap to your screen. I think that's just to appease them. Right. So, what should someone look for when they're getting their credit report? As far as DTI. Say they don't have someone like Mr. Marcus or, or the credit godmother, Angela, to look at it.

What should they be looking for themselves? 

Angela Kim: So when you're getting a mortgage, it depends on what kind of mortgage product you're going for. Are you going FHA? Are [00:22:00] you getting VA? Conventional. So there's DTI when it comes to looking at every single thing on your credit against your income to qualify you for the mortgage.

But for day to day consumers, for your credit, what you should be concerned about is your Usage on your credit card. So let's go back to that example of a thousand dollar credit card So if you are given a thousand dollar credit card The bank wants you to use it the more you use it better They're going to make more interest more money off of the merchants, right?

So you could use 950 No problem every month. However, when that bill comes you want to bring it below 30 percent of your limit Which is roughly around 300, but you don't want to keep it that close. So I always advise my clients Why don't we put it under 200? So imagine how much easier it is to use your credit.

If you have really good credit and you have a 10, 000 credit card, you're not as cautious about spending 2, 000 as to spending 200. That's the power of credit. So it's really important to build credit, but I would say DTI, debt to income ratio for your credit [00:23:00] card is concerned. 20 percent is a good number.

30 percent is the math that generates your credit score, but 20 percent is a good number. 

Bisendra Melaram: That's great advice. Thanks. Okay, you just jog my memory for great advice. So normally FHA does not have a minimum credit score requirement. the guidelines says there is no minimum score requirement.

That's 

Jason Marcus: on the VA loan. The FHA definitely has a minimum. But like Angela made reference to, you're talking about you go on below 580. That's 580. That three and a half percent now has to become ten percent and like you're not you're never gonna get a bank Like we any bank that i've worked for I don't think we've ever gone Below maybe a 540 on it And it's like the other thing is there's automated systems that you're running this if that 399 try to apply for a mortgage There's zero chance on that.

Bisendra Melaram: We know better. So Where I'm going with this is that's purely based on the lender like you [00:24:00] just described each lender has different guidelines that they follow Yeah, 

Jason Marcus: they'll be like and most of them like aren't even there would I work for places where they wouldn't touch an FHA under 620 let alone a 580 But most of them like 580 is the cutoff.

I remember getting to the point where with extenuating circumstances, they would allow me to go 540 560 depending on like But everything else it's all always about the math like the Fannie Mae and freddie mac who are you need to get those automated approvals from They're weighing these things like so they're going to reject you So then they have their own criteria for what they call manual underwriting, which is giving the banks permission to Give these types of loans based on criteria That is below what they would accept but with Extenuating circumstances.

So, if you're just a knucklehead that decided that you [00:25:00] needed a Maserati when you should have bought a Hyundai, like, they are Oh, I'm sorry. Um, they, they're not going to give you that. But, you know, if you had Something that kept you out of work like an illness where that's what brought you behind and clearly there's a path that they see as clear as day that this person is methodically improving their station.

A lot of times that'll be a judgment call that an underwriter makes with a good enough excuses on that where they'll allow something like that to get through. 

Bisendra Melaram: Interesting. So the only time I've ever been confronted with a situation like that on the sales side is when I'm doing a short sale. and the borrower who is in this case is the seller has extenuating circumstances that they have shown to the lending institution and the lending institution has accepted it.

So it gets reported if I'm not mistaken as satisfied. It [00:26:00] doesn't say paid. It doesn't say anything. But the lateness is or the missed payments. Have affected their credit score negatively beyond my comprehension But I remember there's one family they were able to buy I want to say 24 months later with it with an 

Jason Marcus: FHA 

Bisendra Melaram: with an FHA and they had to write a letter and Submit it to the underwriter for final approval explaining why what?

Led them into the state of a short sale and they were able to get a mortgage Yep And what I found was that was pretty interesting is they actually wound up qualifying for a mortgage About a hundred and fifty thousand dollars more than the original value of their home that they had to sell short so my question is How does that get corrected when you have a property that a Mortgage and then you you have to You Let it go right or sell it [00:27:00] short without completely satisfying it That affects your credit tremendously.

How does someone come back from that? So They can go purchase again because that purse that particular seller had a family member that worked in quote unquote credit Right? I don't know who that person is. I don't want to, you know. So they helped them and they got their credit score to where, somewhere where a bank was able to finance them.

So how does someone, or how do you fix that? I'm confusing myself now. 

So 

Angela Kim: I'm very honest with my clients. Um, I think the initial consultations was important. What's your end goal? For example, with this client, the end goal is to purchase another home in a few years. So with that in mind, we would have to take a look at credit.

So if a family went through a financial hardship, how There would be a lot of late days if it led to a point in which where you did have to do a short sale on the property, guess what? You probably would have had to let go your car payments, a lot of different credit cards. So probably there's a lot more than just that mortgage [00:28:00] itself that has to be rectified.

So I think FHA has a lot more lenient guidelines to help a person to purchase another home again. But they are still going to look at credit. So I assume that, um, they were able to work on their credit a bit, as well as supporting income in order to qualify for 150, 000 and more of a mortgage a couple years later.

So the first step would be taking a look at credit. Probably there are a lot of other debt that were let go that has to be addressed and help them build positive credit history. We kept talking a lot about credit score, but when bank, when markets looks at someone's credit score, They really care about worthiness.

Is this person able to pay me back? And, um, looking at everything involved, we would have to fix credit, help that client rebuild so they could buy a house right after the 24 months of doing a short sale on the property. 

Jason Marcus: And keep in mind, a lot of times, like when we went through that short sale, uh, period of time, mostly in, you know, 08, 09, and in that, a lot of the shorts wound up having two mortgages.

So the [00:29:00] firsts were getting satisfied and the seconds were getting like basically holding the bag. So like that also had a different effect if it was like one loan versus two loans and just the lates on, on how it was, and even the recommendations by modification companies on telling people to go late so that way they can modify.

It was a really strange time. I couldn't, I couldn't believe it was, 

Bisendra Melaram: there was actual attorneys telling people don't pay. And then they would call me and I'm like, what are you talking about? You, if you can pay pay. And everybody was like, are you nuts? But I, it was a different time. It was a different time.

Angela Kim: I think we're going to see that again in a few years. Cause a lot of people didn't pay their mortgages during COVID. So you added it on to rear. So I've had a client last week and she swore that she owes a million dollars on her mortgage with TD bank. That's what that is. The app says when you look at the credit report, there was an extra hundred thousand.

So she bought a very nice, luxurious home pre COVID. So if you didn't pay your mortgage for six months or a year, it's going to [00:30:00] have a lot of payments that you owe. So it goes in the rear. And a lot of times it's not interest accruing. But when you need to sell your home or when you need to refinance, you need to satisfy that in full.

Right, because you still owe that money. Exactly. And 

Bisendra Melaram: that's a lot of confusion. It causes a lot of confusion. I get calls about it Once every two months, people saying, Hey, I was in forbearance during COVID, um, when do I have to pay that? Do, do I not have to pay that? Yeah, you don't have to pay it right this very second, but it still exists.

The bank's still holding, you're still obligated to pay that, that money back. And they're like, Oh, but that's not what they told me. I said, read the document. I remember 

Jason Marcus: we were in a refinance boom. So I was sitting there dealing with the rules of forbearance, like in regards to, cause people were trying to have their cake and eat it too.

It's like, Oh wow, rates are at 2. 75 and I'm sitting at four and a half, but it's like, Oh wait, but you're in forbearance. Like I have to wait for you to make three on time payments before I can like refinance you. So that was. [00:31:00] I was hunkered down in like a 10 by 10 room, like sitting there, like just playing with calendars on when I'm going to be able to get these people to pay and like how I'm going to refinance them and what I'm going to wind up doing again.

Strange times. 

Bisendra Melaram: Yeah. Hopefully it doesn't repeat itself in the next few years because it's going to, I foresee something happening. But nothing to the level of what it was in the 2000s. I 

Jason Kleiger: feel like COVID was a generation. Oh, the 2000s. Well, I mean, look, every generation has their issue. Oh, yeah. And 2008 was a, was some time.

And then you had, uh, and now you have COVID that came along and, and, you know, it changed everything. I remember, you know, doing closings and all of a sudden everyone's in forbearance. And, you know, and it was an issue because people didn't realize that, hey, like this, you know, You got to get out of it and show the lenders that, uh, you know, you can make those on time payments before you get here.

So it does become an issue. And I've spoken to so many [00:32:00] like loan officers about that issue. And I'm like, no, no. Like, you know, I know we have to wait. I got to buy time, uh, on my contract. Cause I'm still on her about 60 days, but yeah. 

Angela Kim: Yeah. Every agreement's different. You would have to read your loan mod agreement or forbearance agreement depending on when you did it, what the terms are.

Bisendra Melaram: If the bank is still in existence.

I knew that was going to get a head nod. 

Jason Marcus: Cause we like then it's, and me and Jay can attest to this when we're sitting there, just trying to chase sats and it's a satisfaction of Morgan got the mortgage people. So it's like, inevitably it's the responsibility at a closing for the title. To the title company to file that paperwork now, we went through a point in time in those 2000s where Title companies weren't filing sats banks were going out of business and then all of a [00:33:00] sudden fast forward 10 years And you're trying to sell this house and it's like i'm I'm not going to bore you guys with the details, but you can't imagine some of these like unbelievable conversations that I'm having with people where I'm trying to explain using credit reports that it's like, it is clear as day that this has been satisfied.

But because the bank was acquired by another bank, which was acquired by another bank, which sold and then closed and then was acquired by another bank. I'm trying to chase a sat that there is, Zero chance in me being able to ever find and just trying to appease an underwriter to get to a point where we can close on these things or a bank attorney in that case.

And you just, you can't believe systematically that it's that convoluted and couldn't even be rectified. Like, it was almost impossible to rectify. 

Jason Kleiger: I don't know, there's a, there's a, uh, an issue with SATs. I, first of all, I hate chasing down SATs, I hate calling banks or, and they have no idea what I'm talking about.

No [00:34:00] idea, okay. Especially like there's some, some California banks. They really have no idea. Uh, but it's on the bank. They, you know, the, the Feds require that the bank file satisfaction and provide it. Uh, and you know, you were saying it goes from one bank to another, you don't know how many banks I've had to look up on the Federal Reserve website.

to see who took them over, like when they filed for bankruptcy or liquidation or insolvency, and, and you call that lender and they have no idea. And, it's just, and then you have a lot of these mortgages that are, are assigned uh, to a different lender, and to them, to a servicer. And, again it's, it's, it's, it's, An absolute nightmare, um, to, to find these sets.

And if you don't have a satisfaction, you're really not going to be able to sell your house and it becomes a problem. It really 

Jason Marcus: does. And it's like, you inevitably get in touch with the bank and it's like, why wasn't this sat filed? And you're like, Oh, sorry. It's like, you'll have it in four to [00:35:00] six weeks.

Yeah, exactly. Then you get something like that. It's like, I need to close tomorrow. Like what? And it's like, as if. Yeah, don't get us fired up about that. So 

Bisendra Melaram: Angela, when you receive a new customer or a new file from either some, a mortgage maestro like Mr. Marcus or an attorney that their client needs some help, what's your normal process?

Walk us through the process. You have their credit report in front of you, you have the client in front of you, what's the process for you? You put them on a plan like It's individualized. What do you do? 

Angela Kim: So um, everyone's credit situation is very different. So if it depends on the bank, certain banks don't let you forward the report at all because there's a lot of confidential information.

Depends on the brokerage as well. If that is allowed, obtain the credit report, go over it with a client and identify what is a problem. How can we solve it? How can we get you to 680 to qualify for the mortgage? So that's usually what the consultation looks like. Getting [00:36:00] the report. Going over everything together and then executing to the end goal.

Bisendra Melaram: Awesome. So is the goal normally six 80 or is it the highest score? So I, because that's a question I get asked a lot. Yeah. Higher 

Angela Kim: the better. I mean, anytime you're getting a mortgage, the higher the credit score, the more money you could save. I know we talked about how you could be as low as 500 to technically get FHA mortgage, but you need to down a lot more money.

So the better the credit score, the more money you can save. So usually clients wanna be at least in the seven hundreds or better, but six 80 is a. score that a lot of banks want to see you at 

Bisendra Melaram: minimum, right? 

Angela Kim: It could be a lot lower, but ideally, 

Bisendra Melaram: I mean, to the benefit of the customers, 680 is not a bad place to, to hover.

Let's just leave it. It's right. It's not terrible and it's not fantastic. So 

Angela Kim: I mean, every 20 points, So 

Bisendra Melaram: That's true you never told me that I mean basically 

Jason Marcus: you it just depends on what you're talking about like so Product wise [00:37:00] but on the conventional side Yeah, pretty much every 20 points, but you'll see it like that's not exactly Weighted perfect like perfect example is like you'll a person like 720 on a conventional mortgage What Fannie and Freddie do is they build in risk based pricing adjustments.

That's what those are called. So it's like certain tiers. Like have major jumps to them. So like you might see like the, the difference between a six 60 and a six 80 might be, you know, an eighth of a percent, but the difference between six 80 and or six seven hundred and seven twenty might be a quarter of a percent.

Like they have it built in and there's charts. You guys can go online and actually look at Fannie and Freddy's charts. They'll show you what they call loan to value, like the percentage that you need to borrow versus the credit score. And like there's charts in regards to what their adjustments look like and they shift those around all based on Analytics [00:38:00] and information that they basically come up with and then they decide on how they're going to change that grid.

So there's points in time where we're sitting there and like Fannie and Freddie are making adjustment on something where you're just scratching your head on like how is this even possible that they're making that adjustment but it's a drastic adjustment. And they're manipulating, I shouldn't say that, they're changing those numbers.

That's a Freudian slip for you guys that don't know. Um, they're changing those numbers fairly, fairly frequently. 

Bisendra Melaram: So, we did a transaction, we won't mention any names, a couple, maybe during COVID. Actually the three of us. and that particular buyer had what I believe to be good credit. You had no issue.

But the buyer had an issue. So I know he was hovering mid 7s, but he wanted a better rate like we were talking about this whole time. Is there actually a benefit for someone to come to Angela, and have their, see if their credit can be boosted. 

Angela Kim: I have clients all the time wanting to raise their credit score by 50 points or a hundred points.

That's going to change your [00:39:00] down payment amount. Also your interest rate right now, right now, rates are higher than where it was last year or the year before. So if you are at 780, you're going to get a much better rate than being at 680 or 620. So it matters. 

Jason Marcus: Drastically matters when those are the differences.

Bisendra Melaram: So I have a, I'm going to play devil's advocate. There's of course a cost to doing business with Angela and, you know, having her services get your credit to where you want it to be, right? So which one do you think is better First time home buyers perspective, having Angela bring your credit up or 

Paying points to bring your credits, uh, your interest rate down. 

I'm 

Jason Marcus: It's almost always going to be Angela and that side of the fence really it is it's gonna make it's gonna make more Financial sense to sit there and improve your credit by paying Most likely taking that money and paying down debt and getting a better credit score Then it would be to just buy that rate [00:40:00] down because in most cases a point 1 percent of the loan amount is getting you probably about a quarter percent better on your interest rate.

So if that quarter percent is roughly about 60, we'll call it 60 a month. But I take and let's say you will be taking a 500, 000 loan. So you just paid 5, 000 to save yourself 60 bucks. I guarantee if I gave that 5, 000 to Angela, She will save that borrower in minimum monthly payments alone. Forget about the fact that we're going to get them a better interest rate on the mortgage side of stuff.

If all things are being equal and she didn't even move the needle, she'll do a better job on that monthly liability as a whole by taking that 5, 000. She will find, she will save them more than 60 a month by putting that towards debt than I will by buying down the interest rate. But what will most likely happen is you'll get them their credit [00:41:00] scores up, which I will get them a better interest rate, which will even further that as being the better option.

Bisendra Melaram: Interesting. 

Jason Marcus: And 

Angela Kim: I think the benefit is, um, obviously they would get a better rate on the mortgage without having to pay down as much, but anything you do really in life will be a lot more easier and more affordable with better credit. So not only will they get that mortgage at a better payment because their interest rate's better, but they would get into a vehicle at a much better interest rate.

Rates are higher now, but that's the case anytime you lease or even purchase a vehicle. You're likely to save a lot more money on that, but anything you do really that involves credit, you would save money on. So a one time investment would be well worth it. 

Jason Marcus: And at the end of the day, when it comes down to it, well, let's, let's not even talk about the person who has bad credit that needs to get good credit.

If you're building wealth, you need to eliminate debt. I mean, there's certain debt, obviously, which they consider good debt. You know, your mortgage. Anybody that's, like, I, I always talk about, like, to [00:42:00] me, the biggest enemy to me, like, when I'm sitting there assessing somebody, is the car. The car to me is like, it's a depreciating asset, and it drives me insane.

And it's like, I just gave up that time in life where I'm trying to look cool. So like, with all things being equal, that's where I go nuts with clients that are sitting there complaining about why they can't buy a house that's 100, 000 more, they're driving a BMW with a 900 payment, and I'm trying to explain like that's where your issue lies.

But to me, Elimination of debt is always the fundamental to inevitable financial freedom. So, and I'm seeing this, uh, on the, on the front line. So I'm getting this and I see more credit reports than anybody. So I'm running these things constantly and I'm seeing and I see how people are, [00:43:00] you know, they have a dollar They're spending a dollar five like what there's so many different reasons on why their credit is great Versus it's bad and you have all these things and you're navigating it like you kind of touched on before we first have to observe it, understand it, and then make our recommendations based off that.

But there are a lot of factors. But if you don't get the story on what the intentions are, it's tough for us, myself and Angela to figure out what that recipe is going to be for success for that person, because everybody's driven differently. And we have to understand their entire Lifestyle, what they, how they're spending money, how they're saving money, and all of these things go into it on how our recommendations is going to lead them to the greatest amount of success in that situation.

REALTOR: Hmm. 

Angela Kim: I think it's like going to a doctor's office. You do need to get a diagnosis to see what's wrong with you. It could be as light as a [00:44:00] cold or as serious as cancer, but you don't know until the doc doctor actually does the diagnosis on you. Same thing with credit, but I think cars are big problems and if it's not a lease and if you're not upside down on it Um, one of the things that I always do with my clients is actually refinancing their cars smaller.

Yeah, wait, that's a thing Yeah, it's not a lease if you say the car is worth 40, 000, right and if your loan is around there Or it's less than that, meaning your vehicle is still worth the value that they're worth refinancing for in the eyes of the bank, then we could refinance that. 

Bisendra Melaram: Really? And is that something, a service that you offer?

That is part of it. I know it's a service you don't offer. I 

Jason Marcus: do not offer that. Please do not. I offer that 

Angela Kim: service for um, refining cars all the time. Also student loans. So, 

Bisendra Melaram: oh, the student loan thing I knew about, 

Jason Marcus: oh, I think we need to touch on that because a lot of people don't know that rule, and I see that get affected a lot where when you defer student loans, you are.

With [00:45:00] installment loans, they, the banking world and the credit world understand you're going to start with a high balance. Let's say you have a student loan of 10, 000. We understand that you're going to start at 10, 000. But what a lot of people do not know is when you defer those student loans and you're adding principal to it and you start to borrow more money.

Then you initially took out the credit scoring system does not love that So like a lot of times in my recommendation I'll get these people that deferred student loans and let's say they need to get that credit score up And it's not something that would call for Angela's assistance in this. It's not major.

I'll sit there and tell them Hey, listen, the quickest way for us to get this score up is you're about you you owe 11 thousand dollars 10, 500, but you borrowed 10, 000, like get it under that 10, 000 number so it doesn't trigger that deduction to your credit score where a lot of times I'll have them [00:46:00] consolidate where because when we're seeing it, we're seeing every semester you take out a loan is an individual loan.

So the client's like, Oh no, I'm paying my student loans. It's one payment. But it's like, in our world, we might see five, six, eight, like, yeah, we're seeing all these different things. And each one of them that exceeds that rule that I just said, because they deferred it, and when the company's intaking the money, they're paying X amount of dollars to different numbers, which are at different percentage, it gets crazy.

So a lot of times, like, that's where I'll sit there, It's like if I need a quick fix, a lot of times it's installment loans on the student loan side. 

Angela Kim: It's like going over the limit on your credit cards. Correct. Essentially, yeah. But 

Jason Marcus: nobody knows this stuff. Nobody know. This gets back to our point before.

It's frustrating. It's like, how is this not taught in 12th grade or freshman orientation? Are you guys kidding me? Are you kidding me right now? It's, it's not taught I'm angry. It's not just [00:47:00] angry. Yeah. It's not taught 

Jason Kleiger: in freshman orientation for the simple thing. The schools are making money. You take out loans, you're paying, you know, your tuition.

Boom. 

Bisendra Melaram: Well, higher learning is different. They're getting paid right off the rip. 

Jason Marcus: Yeah, they get, like, it's the banks that are backing 

Jason Kleiger: that. But yeah, I mean, you know, I don't remember exactly what I had to do, but I remember it didn't take long for, uh, you know, me to borrow 50, 000 to go to law school for a year.

You know, and yes, for a year. Um, and, you know, You know a couple clicks of the mouse a couple keystrokes of the keyboard and next thing you know I'm another 50, 000 in debt and you know It's so easy and you see all the stuff and you just think it's jibber jabber and fine print and everything like that And you don't really know what you're getting 

Angela Kim: into.

It's very easy to borrow money. Yeah, is it? It's a 

Bisendra Melaram: student loans yet I think the further you go and the higher the tuition gets the easier it is for them to give you the money Because they know, ah, they're going to be good for it because they're working towards [00:48:00] this profession. So they're like, we're going to get our money.

Jason Kleiger: I don't know. I don't know. Like, first of all, that's discrimination. How's that discrimination? You know, graduate students or law students versus undergrad students. Oh, I didn't say anything like that. Alright, I'm not going to say which majors that, um, you know, don't really have an endgame to it. Um, but, yeah, I mean, you know, look, it's, alright, I have this degree in political science.

Well, what am I going to do with it? I could be a teacher. Oh, I need a graduate degree. Okay, uh, or I could be a lawyer. Oh, I have to go to law school. So it's like, all right, sack on some more debt. And there's really no choice you have. I mean, what am I going to do? I'm sorry for all those people, but this was my thought.

Okay, this was only my thought. What am I going to do with a bachelor's in political science? What, am I going to like, study politics and mix potions and stuff? No. Alright. The people who go, go to be a history teacher, uh, or a lawyer, or they find some other, uh, you know, uh, career, some alternative career.

Like truck driving. I wish I, I [00:49:00] wish. I wish I were a truck driver. 

Bisendra Melaram: Shout out to all the long distance truck drivers in America. 

Jason Kleiger: Yes, and I know you have sleepless nights and everything like that, but still. Wow. But yes, um, you know, I was in a pickle. I had to borrow money to go to law school so that I can have a career.

And that's what I did. That's what I did. 

Bisendra Melaram: So, student loans can be re fied.

You said you can get it deferred in the case. They constantly get, and then, oh gosh. 

Jason Marcus: COVID. Oh my gosh. Like, don't, don't tell me you're doing me a favor when you're not doing me a favor, US government. Don't do, don't tell me it's a favor. Okay. Don't tell me it's a favor. I'm looking at these credit reports.

I'm looking at these student loans. It is, it was not a favor you did for people. So what did they do? They kicked the can down the road. You know, like as if, Oh, don't worry about it. You can't pay now. Like there's an [00:50:00] illness going around. You're fine. Let's just sit there and kick that can down the road and then drop it on you after, like, we're out of this thing.

It's like you did nothing. And now they're in this weird position where we're getting these. Loans forgiven. So guys like me that like worked our tails off to pay it now, like other people are getting it forgiven, like, which is bothering us and like added up to the other thousand things we're disgruntled about in regards to government inappropriate spending on things.

And. You know, you get diatribes from Jay Marcus on podcasts. 

Bisendra Melaram: So Angela, give our listeners some tips on red flags to look out for when they're looking to have a professional help them repair their credit. 

Angela Kim: It's really important to read reviews. So best would be to get a referral from Marcus, for example, go to Angela or go to this person to work on your credit.

And I think having free consultation is also important. Okay. You [00:51:00] never know what's going on with your credit. A lot of times, clients think that it's that one medical debt, but a lot of times, a lot more on the credit report that's causing more damage to credit. To read reviews and get the initial consultation to see what the problem is, to hear about how they can help you to get to the end goal.

Bisendra Melaram: Okay. And so. I hear a lot of people say the only person or persons that can help you repair or fix your credit are attorneys like my fine friend across from you. 

Angela Kim: So we're actually partnered with Sanders Law. We have attorneys on board to litigate and do um, Inaccuracy review on everything that's on your credit.

So we have a full support of our legal team and we do litigate on all our cases. And, um, I know today we mostly talked about home buying, but it also ties into a lot of small business owners. So we offer a lot of different services when it comes to business credit and identity theft. Something that we could talk about for a different episode.

Bisendra Melaram: We'll bring you back for that episode that's on my or our [00:52:00] list of topics So if you want to come back when we can discuss identity theft, we'll actually have another one of our past guests on here Oh, yeah. Yeah, I know you're gonna You don't like that because a lot of it affects a lot of people that I know personally I don't know about you guys, but I know a lot of people who's had their identities stolen Anything else with the red flags?

Angela Kim: Would be also, um, saying that they could get everything off for you in like a week. Yeah, so that's, that's a 

Bisendra Melaram: common thing. So I had someone I spoke to today and they said, Oh, I'm just going to, I'm following this girl on TikTok. Maybe I shouldn't have gone that specific. That helps people repair credit. And I've screenshotted her letter and I'm going to send it to the credit bureaus myself because Credit Karma says I only have 619 credit.

Credit Karma. Right. So what about people like that? what do you think? 

Angela Kim: Um, it has become a lot easier for people to dispute inaccuracies, air quote, on your credit report. A lot of the times, if you were late on [00:53:00] your mortgage, chances are they're going to verify that you were late with your mortgage just last month.

So you could send out the letters, but. I'm sorry to say a lot of times you're going to get kicked back saying those things are accurate. So you have to pick and choose as to what you're disputing. And do you have someone who really understands the whole legality of credit? And is that one late payment really dragging you down to 520?

Probably not. Other factors that's affecting your credit. So if we work on the other factors and also Work on that mortgage and how to help you set up auto pay, help you build positive credit, then chances are credit will be built up in a couple months. 

Bisendra Melaram: Yeah, that auto pay thing really helped me even though I didn't think I needed help.

All of a sudden I was like, wait, I didn't apply for anything. I didn't do anything. I didn't miss anything. And then all of a sudden I'm up 40 points. And I'm getting new offers and I'm like, wait, wait, wait, I don't want any offers. Stop, stop, stop. But that auto pay thing is, is very convenient. Set it and forget it.

Jason Kleiger: Yeah. And they give you discounts. So like AT& T, I get like a 20 discount for setting up auto pay. [00:54:00] Yeah. My 

Bisendra Melaram: car insurance is the same thing. 

Jason Kleiger: Yeah. 

Bisendra Melaram: Mmm. You guys have any questions for Angela? Cause I'm, I'm more curious about this identity theft thing now. 

Jason Marcus: Yeah. No, I'm definitely looking forward to that. It's messed up, right?

Yeah. That's going to be a great segment. Yeah. 

Bisendra Melaram: Angela, do you have any questions for us? No, that's great. Anything you want to talk about? 

I think 

Angela Kim: we touched upon everything today that we wanted to. 

Bisendra Melaram: Thanks Angela for joining us on this episode to talk about credit We will be putting Angela's contact information in the show description and gentlemen, thank you for being here Always a pleasure. Love it. listeners whether you're just starting your home buying journey or credit concerns are holding you back.

This episode will hopefully empower you to take control of your financial future and unlock the door to your dream home. Thanks everyone.