Question 1

What is the minimum credit score required for a mortgage?

Accepted Answer

The minimum credit score depends on the loan type. FHA loans generally start at 580 (with 3.5% down) or even 500 (with 10% down). Conventional loans typically require a score of 620 or higher. The higher your score, the better the interest rate you can qualify for. If your score needs work, Liz offers credit repair services to help you get mortgage-ready.

Question 2

How much down payment do I really need?

Accepted Answer

A 20% down payment is a common myth. In reality, conventional loans can go as low as 3% down, FHA loans require just 3.5%, and VA or USDA loans (for eligible borrowers) can require 0% down. Putting less than 20% down will typically require Private Mortgage Insurance (PMI), which adds to your monthly payment.

Question 3

What is the difference between a fixed-rate and an adjustable-rate mortgage (ARM)?

Accepted Answer

A fixed-rate mortgage locks in your interest rate for the entire loan term (e.g., 15 or 30 years), giving you predictable monthly payments. An adjustable-rate mortgage (ARM) starts with a lower initial rate for a set period (e.g., 5 or 7 years), then adjusts periodically based on market conditions. ARMs can save money short-term but carry risk if rates rise significantly.

Question 4

What are closing costs and how much will they be?

Accepted Answer

Closing costs are fees paid at the end of the real estate transaction, covering items like loan origination, appraisal, title insurance, and attorney fees. They typically average 2% to 5% of the total loan amount. For a $300,000 home, expect $6,000–$15,000 in closing costs. Some can be rolled into the loan or negotiated with the seller.

Question 5

What is Private Mortgage Insurance (PMI) and how do I avoid it?

Accepted Answer

PMI is an additional monthly fee required by lenders when your down payment is less than 20% of the home's value — it protects the lender, not you. To avoid PMI, you can put 20% down, use a piggyback loan (80/10/10 structure), or choose a lender-paid PMI option. Once you reach 20% home equity, you can request PMI cancellation.

Question 6

Can accurate negative information be removed from my credit report?

Accepted Answer

Legally, accurate and verifiable negative information cannot be removed before its legal expiration date — which is typically 7 years for most negative items (10 years for bankruptcies). However, inaccurate, unverifiable, or outdated information can and should be disputed. A legitimate credit repair service focuses on disputing errors and inaccuracies, not on making false claims.

Question 7

How long does the credit repair process take?

Accepted Answer

The timeline depends on the complexity of your credit history. The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate disputes within 30 to 45 days. However, meaningful credit improvement — especially after multiple derogatory items — typically takes 3 to 6 months of consistent effort, including on-time payments and reducing credit utilization.

Question 8

What is the difference between doing it myself vs. hiring a credit repair company?

Accepted Answer

Legally, credit repair companies cannot do anything you cannot do yourself for free. You have the right to dispute errors directly with the three major bureaus (Equifax, Experian, TransUnion) at no cost. The advantage of working with a professional is strategic guidance, time savings, and knowing which items to target and how. Liz's team acts as your financial advocate throughout the process.

Question 9

How do I spot a credit repair scam?

Accepted Answer

Watch for major red flags: companies demanding large upfront fees before any work is done, guarantees of a specific score increase or timeline, suggestions to create a 'new credit identity' (illegal), and pressure to dispute all negative items regardless of accuracy. Legitimate credit repair companies are transparent, comply with the Credit Repair Organizations Act (CROA), and never promise results they can't guarantee.

Question 10

How do collections and charge-offs affect my credit score?

Accepted Answer

Collections and charge-offs are major negative marks that significantly damage your score. Simply paying off an old collection or charge-off will NOT immediately spike your score — the negative history typically remains for 7 years from the original delinquency date. However, newer FICO and VantageScore models increasingly ignore paid collections. Your best strategy is to negotiate 'pay-for-delete' agreements where possible.

Question 11

What credit score do I need for a business loan?

Accepted Answer

Your personal credit score matters significantly, especially for newer businesses. Traditional banks and SBA lenders typically look for a personal score of 680 or higher. Alternative and online lenders may approve scores as low as 600, but at higher interest rates. Business credit (via your DUNS, PAYDEX score, etc.) is a separate profile that grows independently over time and can reduce reliance on your personal score.

Question 12

What is an SBA loan and how do I qualify?

Accepted Answer

SBA loans are government-backed loans issued through approved lenders (banks, credit unions) with the U.S. Small Business Administration guaranteeing a portion of the loan — reducing the lender's risk and enabling lower rates. To qualify, you typically need: a personal credit score of 680+, 2+ years in business, strong revenue, a personal guarantee, and extensive financial documentation (tax returns, P&L statements, business plan). They offer the best rates but take longer to close.

Question 13

Do I need collateral to get a business loan?

Accepted Answer

Traditional bank loans and SBA loans often require collateral — business assets, real estate, or equipment — to secure the loan. Startups or businesses without physical assets frequently cannot qualify through traditional channels, which is why they turn to unsecured lines of credit or revenue-based funding. Liz specializes in helping businesses access unsecured credit facilities that don't require putting assets at risk.

Question 14

Should I look for debt financing or equity financing?

Accepted Answer

Debt financing (loans, credit lines) means you borrow money and repay it with interest — you retain 100% ownership. Equity financing means you sell a percentage of your company to investors in exchange for capital — no monthly repayment, but you give up ownership and future profits. Debt is better for businesses with consistent revenue; equity suits high-growth startups that need capital without immediate cash flow.

Question 15

What documents do lenders look at during underwriting?

Accepted Answer

Lenders universally require: a structured business plan with financial projections, 2–3 years of personal and business tax returns, 3–6 months of business bank statements, cash flow projections, and Profit & Loss (P&L) statements. Some lenders also require a balance sheet, accounts receivable/payable aging reports, and legal documents (articles of incorporation, business licenses). Being prepared with these documents significantly speeds up the approval process.

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Frequently Asked Questions

What is the minimum credit score required for a mortgage?

How much down payment do I really need?

What is the difference between a fixed-rate and an adjustable-rate mortgage (ARM)?

What are closing costs and how much will they be?

What is Private Mortgage Insurance (PMI) and how do I avoid it?