Credit Repair 101

Credit Repair 101

The first (most crucial) step to buying a home is learning what you can afford to finance.  But a few dings on your credit can make home buying seem unattainable. It’s extremely important to start working with a mortgage broker sooner, rather than later.  They will be able to give guidance and help direct you to get your credit score in line, as well as touch base with you to check on your progress. Some of the tips they may give you will include:

  1. Order copies of your credit report from all three credit report agencies (Experian, Equifax, and Transunion)
  2. Review all three credit reports for errors — after all, clerical errors can happen!  If you find errors, you can submit a credit dispute letter to correct the issue.
  3. Your payment history is 35% of your FICO score.  If you have a car payment or outstanding credit card debt, make sure you submit your payments on time!  
  4. Your second highest FICO score comes from your level of debt.  Ideally, your credit card debt should be 30% or lower than your credit card limit.  Work to lower your credit card debt as quickly as possible.
  5. Pay any outstanding judgments.  Those linger on your credit report until they are paid off or for seven years.
  6. If you have student loans that are in default, talk to your lender about your options.  You may even opt to consider a student loan forgiveness option.
  7. If you’ve filed for bankruptcy or foreclosure, your best bet for credit repair will be timely payments.

Getting your credit reports in good shape will help you tremendously as you begin to look at real estate options available to you.  It’s tedious and one of the least fun tasks to be done, but it’s worth it in order to purchase your dream home!

 

Chrystal Yates
Chrystal Yates
chrystal.yates@allentate.com