How to Fix Your Credit Before Buying a Home

Your credit scores are used for many purposes. They set the interest rate on home purchases, automobile purchases, insurance rates and yes obtaining a credit card. So many people get involved in the credit card offers that come in the mail. Then its like a horse race. Your   off  to spend, and spend after all its not money. You psychologically don’t think of it as money until the bill comes. Did you look at the interest rate before accepting the credit card? Most people don’t. Those shopping sprees you  take  may  take  years to  pay   off . If you miss or are late on a payment it affects your credit score. Credit scores for home loans should be above 640. They range from 300-850 points.

There are three major reporting agencies or credit bureaus. If you have been denied a loan you have the right as a consumer to ask for your credit history.

First lets look at what is reported. Each store or agency you borrowed money from keeps a monthly record of the amount you owe, if it was late and how many times. If you did not  pay . Before I get into how to fix your credit history lets  take  a look at the terms they use.

Charge  offs  are when the agency has basically given  up  on you ever  paying  them back. They write it  off  as a bad debt.This is one of the reasons you can be denied a home purchase or other credit. This figure is also reported to the government as income and you will be responsible to  pay  taxes on that amount.

Bankruptcies can lower your score by 200 points or more.

Late Payments can be explained if it a isolated incident but if you have a history of late payments your chances of getting further credit is slim. If they do decided to give you credit the interest rate will be extremely high.

Reporting mistakes may included a late payment or over charges. Don’t wait do it now. People make mistakes and it can be fixed.

How to fix your credit is like an elephant one bite at a time. If it is a late payment contact the company, explain the reason why. Ask for it to be removed from your credit. If you are always late repairing the problem is a little more complex. Contact the agencies involved, let them know what is going on. Ask for your charge card to be terminated. Make a payment arrangement and stick to it. You can do this with one or all. The idea is to get it  paid   off . Be persistent, follow the plan.

Repair your credit score by doing all the above. plus make sure all your bills are  paid  on time. Avoid new credit cards.  Pay  cash for things you need instead of credit. Keep working at  paying   off  those current bills.

You may have to wait to buy that house until your credit is repaired, but it will help improve your terms and interest rate.

Post time: 11-15-2017