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Top 12 ways to fix your credit history so that you can apply for a mortgage

getting a mortgage

fixing your credit to qualify for a new mortgage

We would all like to own our home, but the process is not always so easy. Most lenders now require a large deposit, and on top of that, they would love you to have a perfect credit score. Not many of us have that perfect credit score, however, it is important to be familiar with the top 12 ways to repair your credit so that you can qualify for a home mortgage.

 

Step 1

Get real – find out what out your actual credit score. There are quite a few agencies, and bureaus, that can help you with that, and it might be a good idea to ask a potential lender who they work with. This ensures that you are looking at the same information that you are, the most popular credit bureau is Experian, and one of the most popular services is Credit Karma.

 

Step 2

How well do you know your finances? Most people don’t know their finances, and you may have a few surprises in store. Set up a spreadsheet and record EVERYTHING that you spend. Now, you can see where you are spending the most money.

 

Step 3

Start saving some money. Once you have identified where you can save money, start by actually saving that money. Put it aside every month, and start a savings account. This can really impress a lender; it shows that you are taking an interest in your finances.

 

Step 3

Are you paying your bills on time? If you are not, make sure that you start doing so, and keep the practice up. It will quickly improve your credit score.

 

Step 4

Don’t close unused accounts. Once you have paid off a credit card, it can be tempting to close the account down. But, even unused accounts are useful, they will show a zero balance and will impress a future lender. You might even periodically make a minor charge on that inactive account

 

Step 5

Don’t apply for too many credit cards or accounts. It often has a negative effect, and all of those searches will show up on your credit report. Also, don’t consolidate debt, credit agencies don’t like that. Deal with one debt, pay it off and move on.

 

Step 6

Have you been divorced? Tell the credit company as sometimes credit which your former spouse may have applied will show up.

 

Step 7

Are you having a credit problem? Don’t ignore your lender, speak to them and communicate with them in writing. Once you have started to make regular payments, make sure you keep them up.

 

Step 8

Student loans may be following you around for a long time. It is a big problem, but can you do something to help yourself? Negotiate with your lender and ask if you can pay a bit extra towards your student debt every month. The advantage is that many lenders are happy to reduce their interest rate a little bit. Even a small reduction will help you to pay off that loan quicker and cheaper.

 

Step 9

Do you need a new car? Are you absolutely sure? You may be able to buy a second-hand car for cash, instead of using finance. After all, it is not about having a new car; it is about buying a home.

 

Step 10

It may seem odd, but a lot of people do not question the amount of tax they pay. Saving money on tax will allow you to save more money towards your home. Keep any paperwork the process generates, it will prove that you are financially savvy.

 

Step 11

Keep your personal information to yourself. So many credit thieves these days are profiting from borrowing your credit history or your personal details. If you don’t safeguard your info, you may have a nasty surprise when you go to try to get a home mortgage; it is all too easy for some to use your personal information and take out loans in your name. This is more common than you might think, and the process of getting the details removed from your file can be complicated. Check your credit history on a regular basis.

 

Step 12

Pay off an existing home mortgage to show your ability to complete your obligations. Think about it, even though your credit score is based on how well you can manage your ongoing obligations each month, creditors still want to see that you can pay some things off from time to time too. Also, since your credit score is based upon how much outstanding credit you are using compared to your income, you can quickly raise your score if you lower your overall debt load. So, if you are thinking, “but I don’t have enough money to pay off my home,” you could consider selling your house and then just renting for a while. And if you are wondering “how am I going to sell my home in today’s market?” You should check out a high rated company that buys houses which is listed with the BBB.

 

Above all, appreciate that credit agencies and credit bureaus, should be used to your advantage. Figuring out how you can make yourself look good to a potential lender is all about taking charge of your finances. The top 12 ways to repair your credit so that you can qualify for a home mortgage is all about getting financially savvy.