If you are looking to buy a home but fear that a less than perfect credit score will hold you back from doing so, you might want to think about this…
You need to understand that when it comes to credit, the odds are already not in your favor. What does that mean? It means that there are 130+ ways that you can damage your credit and only 5 to improve your credit score.
First things first. Obtain a copy of your credit report. How to do this? Just go into your local lender and initiate a credit application for a home mortgage. They will pull credit for you and in most cases address the issues on your credit and give guidance as to how to improve the score based on your current financial situation. Then contact any creditors with outstanding balances and explain your current financial situation. Explain that you are willing to work with them if they can settle on a lesser amount rather than the full outstanding bill. Creditors if convinced they will not get anymore than what you are offering right now oftentimes will take 30 to 40 percent of the total balance due. Once that is settled and you have made your final payment, have them issue a signed letter stating that the debt has been satisfied. This is crucial. You need proof to send to the credit bureaus to get them to update your credit record.
In the eyes of a lender, this is a better method of rectifying your credit than setting up a payment plan though a consumer counseling service. By resolving your own credit problems using the partial payment approach, it demonstrates to lenders your ability to be a responsible credit user. In addition to avoiding the consumer counseling services, you should also avoid filing bankruptcy if at all possible. This act will stay on your credit for a period of 5 to 10 years depending on your state.
One of the few methods to re-establish yourself with a lender if you did file bankruptcy is to obtain a secured credit card or two. These are prepaid credit accounts that have the same limit on the card as you have put down as a deposit. That way the credit bureaus see that you have steady credit coming in just like a regular loan.
When looking for a mortgage after credit problems, look to local lenders. Take a recommendation from your Realtor. Just because you have credit issues, don’t expect that you will be stuck with higher interest rates. Some lenders can offer you great options.
So now that you have began the process of fixing your credit. Make sure to make every payment in a timely fashion. In other words…DON’T BE LATE. Banks who have given another chance to someone with a history of late payments have no patience with someone who doesn’t show they are willing to make an honest, hard change.
So when you have demonstrated a pristine record with no payments being late for a year or two. Then you might be able to refinance at rate better than the one you have now. It normally will depend on how much your credit score has improved.
To view more informationon Fairbanks Realty? Please visit Ray Brasier’s Site at FairbanksRealtors.com and watch video interviews on Fairbanks Realty
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