A lot of people who aspire to own their own home will let the fear of their credit score stop them from ever exploring
what their actual score is and how to improve it. This is definitely the #1 reason to start the ball rolling…
As you night have guessed the odds are already stacked in your favor. Yep you guessed it, over 130 ways that your credit can be weakened as opposed to only 5 ways that your score can be improved.
First, you need to obtain a copy of your credit report and contact your creditors. You will need to explain your current situation and offer to pay a percentage of your outstanding bill. Often creditors will settle for 30-40 percent of the total bill. Once you have made your partial settlement payment, get them to issue you a signed settlement letter. THIS IS VERY IMPORTANT. Copies of these letters will need to be sent to all of the credit bureaus (Equifax, Trans Union, and Experian/TRW).
In the eyes of a lender, this is a better method of rectifying your credit than setting up a payment plan though a consumer counseling service. By resolving your own credit problems using the partial payment approach, it demonstrates to lenders your ability to be a responsible credit user. In addition to avoiding the consumer counseling services, you should also avoid filing bankruptcy if at all possible. This act will stay on your credit for a period of 5 to 10 years depending on your state.
So one effective method to redeem your credit status is to go get a secured credit card. Simply just put a deposit down with the bank that you are applying to for the card and the amount that you have in the account is the limit that is on your card. There is no risk to the bank and you get to build credit again.
We always encourage that you let your Realtor refer you to a local lender. They know the local banks that have the ability to get borrowers financed even without “perfect” credit.
So once the process of repairing your credit has began, it is crucial that you make your payments on time. Lenders who have extended a 2nd chance to somebody who has had credit issues in the past will not be so patient with you the second time around. You have now taken control of your finances…DON’T LOSE IT AGAIN! Make sure that you prove to be able to take charge of your credit future.
Once you have shown a history of payments made on time, in a a year to two years you can refinance at a prime rate if the rates are better than what they were when you first obtained financing. The amount saved over 30 years on even a half of a point in interest adds up to thousands and even tens of thousands of dollars. You want to know that you didn’t waste money