Tips on Improving Your Credit
Your Credit History
As part of the loan application
process, virtually all lenders will want to see a copy of your credit report.
The report will list all your long-term debts (credit cards, mortgage payments,
automobile and student loans, etc), as well as your payment history. If you
don't have a copy of your credit report, most lenders will generally require you
to pay for a copy when they process your loan application.
However, most real estate
experts agree that it is a good idea to obtain a copy of your credit report
several months before you apply for a loan. This is so you have a chance to
resolve any problems with your credit before your bank sees it. U.S. Federal law
ensures that you have access to your credit report, which may be obtained from
your local credit bureau or any of several national firms that specialize in
credit reports.
Late payments
For most people, problems with their credit report are likely related to late
payments on a debt. If you were late one month in paying off your credit card,
but otherwise have a good payment history, chances are most lenders won't be too
concerned. But if you have a history of late payments you'll need to document
the reasons why. A slow payment history won't necessarily get you turned down
for a loan, but you may have to pay a higher rate of interest or otherwise prove
to the lender that you can repay your loan in a timely fashion.
Errors on your credit report
Many people are surprised to learn that credit reports can often contains errors
or inaccurate information. If this is the case with your credit report, you'll
need to contact the reporting agency or creditor to have the problem resolved.
This can sometimes be a slow process, so make sure to give yourself time to
clear up the mistake.
Bankruptcies and
foreclosures
There's no getting around it, a bankruptcy on your credit report is not a good
thing. But that doesn't mean you still can't obtain a loan. Even though a
bankruptcy may stay on your credit report for seven to ten years, lenders will
often consider the circumstances surrounding a bankruptcy (family illness,
injury, etc.). Moreover, if you have reestablished good credit since the
bankruptcy, a lender will be more inclined to approve your application.
Improving
Your Credit
A good mortgage professional knows there can be legitimate reasons for credit
problems, such as unemployment, illness or other financial difficulties.
Therefore, you should be prepared to discuss your credit situation with them
honestly. If you had a problem that's been corrected and your payments
have been on time for a year or more, your credit may be better than you think
However, If you are currently in excess debt, here are some tips to help you improve your
situation
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If you're in credit card trouble or have excess credit card
debt, stop using your credit cards.
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Pay off your debt 75 percent faster by making half your
regular payment every 14 days.
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Reduce your
other expenses, even if it means making hard choices or changing your lifestyle
to fit your income.
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Stay away from offers that tempt you to buy merchandise with
no money down, no payments and no interest until a later date.
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By paying the minimum payment on your credit cards, you never
work off the balance. All you're doing is paying interest on the debt you
took on.
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When you get into financial trouble, create a pyramid of
priorities. The most important thing to pay is your mortgage or rent. The next
priority is your car loan, and the third is your utilities, which keep your
house functioning. After that you pay your unsecured creditors - credit card and
loan companies.
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If you need help, don't immediately file for bankruptcy. The
best option is Consumer Credit Counseling, which can help you work out a debt
repayment plan.
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