Copyright (c) 2013 Nikitas Tsoukalis Buying a home is a major investment. A bad credit score can lead to a person not being approved for a loan or only being approved for a loan with a very high interest rate. Taking the time for credit repair before filling out the application forms can help lower monthly payments and reduce the amount of interest the person pays over the lifetime of the loan. Here are the top ten ways to prepare a credit score for a loan application. 1) Pull and review the credit report Knowing a personal FICO score gives a person information about their current credit standing and offers a good benchmark to see if the score has improved after following the rest of the steps. 2) Check for any errors Credit reporting errors occur more frequently than people realize. Take the time to review records, especially mistakes that are negatively impacting the score, to see if there are any errors. 3) Work with credit companies, and if necessary, a lawyer, to correct mistakes If there are mistakes, work with the credit companies to correct them. The mistakes will have to be proven, but once they are, the credit bureaus must fix them for free. 4) Pay in full any outstanding bills If there are any outstanding bills, such as a gas bill on an old house or a medical bill that got lost in the shuffle after a move, track them down and pay them off as quickly as possible. 5) Pay off other debt as much as possible Mortgage lenders like to see that total debt, including their loan, will be less than a certain percentage of a person's income. Substantial debt can also pull down the FICO score. Work on paying off other debt, such as credit card debt, as soon as possible. 6) Consider working with a professional to learn how to manage debt Those who have had trouble managing their debt in the past should consider working with a professional to learn how to manage their spending and debt. 7) Consider closing credit cards Having excessive numbers of credit cards open can also hurt a FICO score and any chance for a good interest rate. While people should leave their oldest credit card open, to establish the length of the credit history, consider closing a few others after they have been paid off. 8) Find steady employment Steady employment will also make a big different in a loan application because it demonstrates a person's capacity to pay off the loan. 9) Avoid applying for new credit cards right before a mortgage While establishing lines of credit is a positive, when a new card is opened, it temporarily will dip a FICO score. Do not open new cards or other credit lines right before a mortgage application. 10) Consider renting if necessary Those who have major blemishes on their credit history, such as bankruptcy, should consider that applying for a mortgage may not be the best move right now. Even if they are approved, they will probably not have a desirable interest rate. Sometimes renting for a few years to allow a credit score to balance back out can be the best thing. Repairing a poor credit score to improve the odds of home buying can be a long and involved process. Taking the time needed to fix the issues, however, can make an enormous difference in a person's monthly payments. Follow the above tips to get started preparing a bad credit score for a mortgage application. Key Credit Repair is a top ranked company on both google and the BBB. Check out our company and services and request a free consultation. We are excited to help future home owners. http://www.keycreditrepair.com
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