You are thinking about purchasing real estate. However, you are not sure if your credit is good enough to get a mortgage. There are things that you can do to build your credit so that it is worthy of any mortgage that may interest you. Your credit report tells banks almost everything about you. It has information about where you currently live and other places you have lived in the past, information about how you have paid all of your bills, your criminal background and history, if youve been sued, if youve filed for bankruptcy, and your previous and past employers. It is a true picture of who you really are. Insurance companies, creditors, employers and other businesses purchase this information from a credit reporting agency before they will loan you money, issue a credit card, or offer you employment. Your credit is very important and will affect your ability to obtain a mortgage. No one is perfect and neither is their credit. However, there are things that you can do to build better credit so that you have a better opportunity to obtain a mortgage at a lower rate. You will find ads in the newspapers, on television, and all over the place for agencies who claim that they can erase your bad credit for a fee. Beware. These are usually scam artists. No one but you can erase bad credit. In time, with a lot of effort, you can pay off your bills and your credit will improve. However, paying your bills is only one way you can improve your credit. You should obtain a copy of your credit report. Once you receive the report, review it closely. Is there something on the report that should not be on there? Is there something incorrect? Incorrect or false information can be lurking on your report and damaging your credit score. If you spot an error or false information, you should send the consumer reporting agency a written letter explaining why you believe the information is incorrect and that you would like it corrected or removed. You should send this request via certified mail to assure its delivery. Keep copies of all of your correspondence to the consumer reporting agency. They will usually investigate your complaint within 30 days. If they prove the information incorrect, they will contact the agency or company that reported it. If the agency confirms the incorrect information, the consumer reporting agency that you submitted your complaint to must contact all other national consumer reporting agencies to report the incorrect or erroneous information so that it can be removed from your report. Most information will remain on your credit record for about seven years. So, if you pay a bill, it does not come off of the report. However, its status changes to resolved debt instead of unresolved debt. Then, after seven years, it will disappear. So, when you have your report, check to make sure resolved debts older than seven years are not lingering on your report. If they are, you should contact the consumer reporting agency to have them removed. You may have some credit cards that are in good standing that do not appear on your credit report. Many bank cards, gas cards, and some department stores may not show up on your credit report. You can call the consumer reporting agency and have these cards added to your report. The good credit you have established on these cards will help build your credit. If the only way you can build your credit is to pay off some of your bills and you are short on money, just take it one step at a time. Set up a budget plan and stick with it. Pay a little each month. Contact your creditors and tell them that you are having problems; they can help set you up on a payment plan or a budget. You should do this before your account is turned over to collections. Honesty is the best medicine, even when dealing with your credit problems! Another option would be to go to a consumer debt counseling service. This is an agency that can help you set up and stick with a budget. They will work with your creditors to lower your rates so that it would be possible to pay off your debt. Be aware, however, that most consumer debt counseling services only deal with medical bills and credit cards. They cannot help you with bank loans, auto loans or other mortgages. These are some basic ways you can help build your credit before obtaining a mortgage. Your credit will play a huge role in determining what type of mortgage rate you will be able to get. If you have poor credit, your mortgage rate will be higher; consequently, your monthly payments will be higher. So, you will want to closely review your credit report before you apply for a mortgage. There just may be something in there that can be fixed and that will keep you from paying high mortgage rates. |
