How To Get Your Credit Ready for the Home Loan Scrutiny

You’ve come to that point in your life when you just know for sure you are ready to settle down into your own comfy home. 

You also know something else. You know that your past credit history will likely prevent the loan company to give you the money you need. Can you do anything to repair your credit and get the mortgage you need?

First, you need to understand exactly why you get turned down.  The number one focus of lenders is your credit card score.  Credit card companies can be a bane, but, frankly, lenders need a solid method to make a final judgment on 

your credit worthiness. The scoring system was developed using statistics from decades of loan information. This is a very valid method to arrive at a decision.

Understand that you need to start taking action long before you sign your name on that loan application. You are looking at a significant amount of time to repair the damage caused by even a single loan gone wrong.

There are three major companies compiling credit scores. Be sure to obtain copies of the reports from all three. Examine them thoroughly for errors. Dispute anything that shouldn’t be on those reports.  If your report shows negative items that are accurate, try to resolve them by paying those debts off - even if it’s a little at a time.

You need to address the past due accounts that are not yet charged off. You want to have the records show "PAID" on them.

If you have accounts already in collection agencies, be willing to discuss them with the agents. You may be able to reach an agreement that is suitable to them and you.

Know that 30% of your credit scored is formulated by your total debt divided by your total credit limit. So, pay down some on each credit card so that you will have more space between what you owe and your limit. This should help your total score quickly.

You must make some big decisions on your current accounts. Concentrate on the accounts that are still in good standing. You are better off to pay down these accounts and let the bad ones go.

Try to open an new credit card account. If you can get one then your score should improve. Don't apply for more than one new account at a time since you don't want inquiries flooding the bureaus. This raises red flags. This holds true whether your existing credit is bad or good.

Remember, this is the time to do battle not to lay down and accept their wrath. Work hard at getting your credit repaired and you may reap some delightful benefits.

 

Greg Cryns is the owner of Flat Fee Real Estate Guide - http://www.flatfeerealestateguide.com