Have past due issues with a credit card or car payment? If so, it may be more difficult to get approved for a mortgage before you clear up your credit history. There are plenty of ways to repair one’s credit. With options such as secured credit cards, people can begin the important process of credit repair and qualify for a mortgage for a home more easily.
REVIEW CREDIT REPORT
The first step in credit repair is to review your credit reports. The U.S. government passed a law requiring the 3 reporting agencies provide a free credit report to every consumer each year. You can request your reports by going to www.annualcreditreport.com. When reading your credit report, check for accuracy of all personal and loan information. If it's incorrect, you have the right to have the credit reporting company aide you in correcting it.
ADDRESS ANY MISTAKES
If and when you find mistakes, be diligent in your effort to repair them. It will be a good idea to contact the credit bureaus immediately and and be ready to supply back up information supporting your claims. These simple actions will help to alter your score and put you on the road to a mortgage.
PAY OFF PAST DEBTS
Another important aspect to repairing your credit is to pay off any past debts or past due accounts. Focus on keeping all your bills paid in a timely fashion.
REMOVE OR SETTLE ANY JUDGMENTS OR LIENS
A judgment is a lien that obligates you to paying a certain amount of money. Judgments can last for about 7 years on your credit report. They are usually placed after a creditor sues you and wins the lawsuit. If you are looking to finance a house and repair your credit, it will be very important to pay down any judgments as soon as possible.
APPLY FOR A SECURED CREDIT CARD
Along with settling old debts and addressing mistakes on your credit report, you will also need to establish a recent credit history. One of the most effective ways to improve your credit is to apply for a secured credit card. This type of credit card has you place a deposit with the provider to "secure" the future dept. It works just like a regular credit card but it is secured by your deposit. Should you default on your payments, the provider will keep your (collateral) deposit. You will want to use the card for small purchases and not use more than 40% of the available credit line. It will be important to pay all balances in full when they are due in order to boost your credit rating.
PAY CURRENT BILLS ON TIME
An important step towards improving your credit rating is to pay all of your bills when they are due. Bills such as your cell phone, utility bills and credit card bills should be paid in a timely manner on a consistent basis. This will prove that you are dependable at meeting your financial obligations which will raise your credit score.
PAY YOUR RENT ON TIME
Paying your rent each month on time will prove that you can handle making payments on your housing on a consistent basis. Making car payments each month will allow you to pay off an installment loan in a timely manner as well. By making timely payments on these key obligations, you will be in great position to repair your credit within a matter of months.
Anyone that is unable to qualify for a home loan will need to repair their credit. Paying bills on time, fixing errors on the credit report and settling old debts will be important steps in improving your credit enough to qualify for home financing. With an improved credit rating, the likelihood of qualifying for a mortgage increases.