Your credit score is a number that's the first of the "three C's" of mortgage qualification, so it's important for it to show that you're a responsible person who does not overextend financially.
If it's a good-to-great score, excellent! But if it isn't, it can halt your mortgage process right away... and leave you wondering what you did wrong.
However you got your rating, if your credit score is less than stellar, don't despair. When I get a bad haircut, I remind myself that it will grow back. A bad credit score? Well, it's not written in stone, and there's a lot that you can do to improve it!
So what can you do to improve your score so that you can qualify for a mortgage?
The first thing you want to do is start by cleaning up your finances :
The first debt you want to get rid of is your credit card debt: it's the most expensive debt you've incurred, and the way that you deal with your credit cards shows lenders how you deal with your finances in general. In fact, it's probably a good idea to get rid of some of them: lenders don't like seeing too many credit cards accessible to you-it says to them that debt is a usual part of your life. Next, pay off any major loans that you might have. Your car loan, for example; if you increase the amount of your payments or add additional ones, you can pay it off sooner-and it will cost you less. Start putting money into a savings account. Mortgage lenders look at the depth of your resources: the more you have in savings, the happier they are.
Done? Terrific! Let's move on. The next step is to improve your credit:
The steps you took when you cleaned up your finances will absolutely improve your credit score all by themselves. Check your credit score. Don't do it frequently, as doing so can be a red flag to lenders. But get a baseline and then check it again in six or eight months to see the improvement you've made. There are a number of places that offer free credit reports... just read the fine print and don't end up signing up for something that you don't want, in addition to the scores that you do! When you check your score, don't just look at the number. Read the report. You may find-as a lot of people do-that there are mistakes on the report, mistakes that can cost you dearly. Look at the reports from all three credit bureaus (Experian, Equifax, and Transunion), and check every entry for accuracy. If there's a negative item on the report that is inaccurate, you can file a dispute by writing a letter (not an email) to the credit bureau that logged the negative item with any documentation you have; the bureau will then investigate. Having even one negative item removed can make a tremendous difference in your score. If you have a past credit problem that was supposed to be eliminated from your credit report but is inexplicably still there, you'll need to notify the reporting bureau as well. These problems can include: Bankruptcy (should disappear after 10 years) Lawsuits (should disappear after seven years) Tax liens (should disappear after fifteen years)
You may think this is enough. But it's not... because whatever got you a bad credit score in the first place can easily do it to you again. This is your chance to start over and to get it right!
So, to that end, make sure that you establish good financial habits:
Your payment history contributes 35% to your overall credit score. There are a few things that you can do to be sure your bills get paid on time: Most creditors will automatically deduct your bills from your checking or savings account at your request. This is particularly useful for your monthly utility bills, rent/mortgage payments, car payments, etc. You can also set up an automatic bill-pay via your bank for those that don't provide automatic deductions. If you still prefer to write individual checks, set up a reminder system that alerts you a day or so before the check needs to go out. Your computer calendar system can probably do this for you. Don't move your debt around from card to card, no matter how enticing the "new" interest rate is. Pay it off instead. If you've been late with bills in the past, make sure that you get current and stay current. It won't happen overnight, but it will increase your score as the "past due" reports slide further and further into the past. Don't own too many credit cards. If you find yourself in extraordinary circumstances (sudden unexpected medical or dental bills, for example), add a credit card at that time as necessary; don't keep them just lying around waiting to be used. Save, save, save! Even the smallest amount of savings can grow.
Following these steps will improve your credit. It won't happen overnight, and it's a lot of work... but ฝากขายทาวน์เฮ้าส์ in the end if home ownership is in fact your goal, this is how you'll get there!
And once you've taken these steps and waited for the scores to catch up to your new ways, you'll be in a far better position to apply or reapply for a mortgage!
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