Five Credit-Repair Musts for Potential Homebuyers
Buying a home is one of life’s most rewarding experiences. Homeownership offers a great way to build equity and create stability for your whole family. Of course, most buyers in the greater Lake Tahoe-Truckee region must work with a mortgage banker in order to secure a home loan. When it comes to loans, it’s important for potential buyers to remember that they have better chances of being approved for a loan if they have excellent credit. A buyer’s credit rating can also affect mortgage interest rates. Before pursuing a home loan or working with a mortgage banker, consider your credit repair options. Taking these five straightforward steps can help to boost your credit rating and will demonstrate to your lender that you are a serious, responsible buyer.
Check Your Credit Report Regularly
As a consumer, you’re entitled to receive a free copy of your credit report on a yearly basis from the three major credit reporting bureaus: Experian, Equifax and Transunion. To get free copies of your report, head to the Annual Credit Report website. Be sure to request a copy of your report from all three credit bureaus. When you review your record, you’ll likely see that there are differences in what has been reported to each bureau. It’s essential that you carefully check each report for accuracy.
Address and Correct Inaccuracies on Your Report
Many consumers don’t know just how common errors on credit reports really are. Information on your report might be outdated or might be downright inaccurate. It’s essential that you work with the three major credit bureaus to report inaccurate information in your credit file. Put your request to have information reviewed and corrected in writing and keep a copy of your correspondence. Check regularly to see what action has been taken. Doing so can make the difference between getting that home loan you’ve been waiting for and being turned down.
Use Existing Credit Wisely
If you’re considering applying for a home loan, take time to honestly look at your debts and your credit-to-debt ratio. It’s essential that you avoid maxing out your credit cards or other lines of revolving credit. Most consumer experts advise potential homebuyers to use 65 percent or less of available credit if they plan to apply for a loan. This is one of the easiest items on your report to change quickly as most credit card companies report your credit usage to the three major bureaus on at least a bi-monthly basis. If you are struggling to get your credit-to-debt ratio down to an acceptable level, work with a credit repair specialist.
Make Timely Payments and Get Rid of Delinquent Debts
One of the key factors a mortgage banker or lenderwill consider when reviewing your home loan application is your current payment history. Your broker will want to see that you pay all of your bills on time. If you have seriously delinquent accounts, accounts in collection or judgments on your credit report, pay them off as soon as you can and concentrate on paying all of your bills on time. If getting rid of delinquent debts is a key part of your credit repair plan, be aware that your chances of getting a home loan are better if you wait at least six months after paying off delinquent debts to apply for a mortgage.
Avoid Applying for New Lines of Credit
A home loan represents a significant financial obligation. You can demonstrate that you’re ready to take on a mortgage by carefully controlling your current spending. Avoid applying for new lines of credit as this can lower your overall score and can send potential lenders the wrong message. You’ll be in your dream home in the Tahoe Basin in no time if you can show that you are seriously committed to buying a home and have prepared for the responsibility of being a mortgage holder.