We have listed some of the most important things you should know about
credit score improvement and how it relates to home buying:
Good credit is the key to financing, especially when it comes to home loans.
When you apply for a loan, one of the first things the lender will do is check your
credit. Why do they do this? Here's why...
Your credit score
is basically a numerical representation of your past financial activity. In
other words, it's a number that shows how well (or poorly) you have managed your
credit in the past.
It's harder to get approved for a mortgage loan today than it was just a few years
ago. Because of the housing crisis and economic recession we just went through,
lenders have tighter lending standards. This makes
credit score improvement more important than ever, especially for home buyers.
You are the only one who can improve your
score. Credit
score improvement starts and ends with you.
There are certain tried-and-true techniques for improving a
credit score. These have not changed much over the years, despite other changes
in the reporting industry. The key to improvement lies within three things
- paying your bills on time, reducing your credit card balances, and fixing errors
on your credit reports.
While it requires patience and persistence over time, this process is well worth
the effort. This article shows the real-world benefits of
credit score improvement, in the form of money saved each month.
There is plenty of information online to help you achieve success in this area.
This directory, for example, offers more 100's of articles on the subject of credit
improvement and similar topics. There are also several private and non-profit
organizations who offer free and
low-cost counseling in this area.
FICO score
improvement can help you get approved for a home loan, and also get a better interest
rate on that loan. We have reference this item. But it's important to
realize you should start this process early. It's a marathon -- not a sprint.
Things You Can Do To Improve Your Credit
Stop using your credit cards
In a bad credit
situation, one of the worst things you can do is continue
accumulating debt
by making credit card purchases. Put your credit cards away until you have
more control of the situation.
Get a copy of your credit report
You can't begin repairing your credit until you know exactly what you need
to work on. Obtain a copy of your
credit report from each of the three major credit bureaus to find out which
accounts need work and which are just fine.
Clean up your credit report.
If your credit report contains incorrect information, you have the right
to have it removed. Your credit report will include information about disputing
inaccurate information with the credit bureaus.
Get current on delinquent accounts
Your payment history makes up 35% of your
credit score. Getting current on your delinquent accounts will have
a great impact on your credit.
Don't put in any more credit applications
As long as your credit is in repair mode, you should avoid making any more
applications for credit. It's likely that you'll get turned down for credit
and the applications will only decrease your
credit score.
Keep accounts with balances open
You might be tempted to close out credit card accounts that have become
delinquent, but wait. Before you close any account make sure it won't negatively
affect your credit.
Call your creditors
Right now they're certainly the last people you want to talk to, but you'd
be surprised at the help you might receive. Talk to your creditors about your
situation. Many of them have temporary hardship programs that will reduce
your monthly payments until you can get back on your feet.
Pay off your debts
You will have to start paying
off your s to improve your credit situation. If you don't have the
money on hand, sell some of your belongings to speed up the process. It will
be a sacrifice, but the financial freedom you gain will be worth it.
Get professional help
Resources are available to assist you. If you are overwhelmed by
your credit situation, seek professional assistance. Some credit counselors
can negotiate lower interest rates and set up a debt management plan with your creditors.
Be patient
Your credit wasn't damaged overnight, so don't expect it to improve in that amount
of time. Continue paying your debts and over time you will see an improvement
in your credit.