Raise Your Credit Score & Purchase Your Dream
Home
You would like to purchase
a home or refinance your present mortgage. You visit with a lender
and have them run a credit check. The lender reports bad news:
your credit score is too low to give you the best possible rate.
Not one to believe everything that you are told—you seek
a second and third opinion—but there is no progress.
Credit scores can change. This is the bad news. Miss a few payments
or open up too many credit lines and your score will decrease,
which may prevent you from obtaining the best mortgage rate or
perhaps prevent you from obtaining a mortgage.
Credit scores can change. This is the good news. Scores that
are low can be raised significantly by taking a few important
steps. Some of these steps may take months or even years to implement.
Others can be effected instantly. Here are a few:
1) No more late payments. One negative factor is the age of
poor credit. Late payments made five years ago are not considered
as much a negative as late payments made five months ago. So
stop the cycle now—make all payments on time.
2) Talk to your creditors. If you are hopelessly behind on a
payment, go back and renegotiate terms with a lender. Whatever
the new terms—get them in writing so you can inform the
credit repositories. It would not be unusual for you to follow
the new payment schedule but late payments still show up on on
your credit report for many more months. Why? The major credit
repositories (of which there are three) were not informed in
writing.
3) Consider a consolidation loan. Though another loan will lower
your credit score initially, if it lowers your overall monthly
payments and enables you to stay current in the long run, the
long-term effect will be positive. But, don’t apply all
over town—constant credit inquiries may keep you from being
approved for the consolidation loan or your next mortgage.
4) Get professional help. If you are totally overwhelmed, contract
a professional credit repair service. They have experience negotiating
with creditors, setting up payment schedules and achieving consolidation
loans. Make sure the service utilized has references and is a
member of the Better Business Bureau within your community. There
are non-profit agencies such as the Consumer Credit Counseling
Service (CCCS).
5) Do not declare bankruptcy. The number of consumers opting
for bankruptcy is soaring for many reasons, not the least of
which is the removal of social stigma attached with bankruptcy.
Lenders still consider bankruptcy a major negative to preclude
lending for the near term. It will typically take seven years
for the bankruptcy to be dropped from your record. Do not take
this step unless there are no other alternatives.
6) Build up savings. All too often, we are faced with credit
problems because we have no savings built up to face future emergencies.
Start saving now—even if just a few dollars each week.
Do not make any optional purchases until your savings goals are
achieved for the month.
Yes, it may seem that the task is overwhelming. How can you
save when you can’t meet yesterday’s bills? No one
ever met a goal without taking the first step. Just knowing that
your credit score can be raised can help you make a commit-ment
and start moving toward that elusive goal. The result may be
the home of your dreams…?
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