Home Ownership 101: Credit Repair to Get a Mortgage

Need a Mortgage? How Credit Repair Can Help You Reach Your Goals

(Daily Dig) – Qualifying for a mortgage can be a hurdle to home ownership if you are looking to apply with past credit issues. Fortunately, there are steps you or someone in your life can take to address discrepancies and improve your credit. Here are some of the most significant ways working with a credit repair company can help you get your credit where it needs to be to help you get a mortgage.

Improve Payment History

Your payment history gives potential mortgage lenders an idea of whether you will typically pay your mortgage on time. Although no one is perfect and it is possible to qualify for a mortgage if you have missed payments in the past, recent late payments will be more significant than older ones. Adding more monthly payments can help to cancel out past late or missed payments faster as long as you are extremely careful not to miss any more. You can do this by spreading out recurring payments to create multiple small payments instead of one larger one, such as putting a single streaming service on a credit card you already have but are not using, or getting a new secured card for only this purpose.

Lower Credit Utilization

You should never be using all of the credit you have available because it tells potential lenders that you are unable to qualify for the amount that you actually need. This can be especially problematic if you are attempting to qualify for a mortgage, which is likely one of the highest-priced financial obligations you will ever have and will come with frequent high payments that your current utilization may indicate you will not be able to handle. Paying off as much as possible, rather than the minimum balance, and attempting to increase your credit limit for each card or other line of credit you have can help lower your overall utilization.

If you do not already have a suspicious number of hard inquiries, you may also be able to add another card for the sole purpose of increasing the amount of credit you have available.

Minimize Recent Hard Inquiries

Mortgage lenders may have concerns if you have an unusually high number of recent inquiries because not being able to get what you need within two or three inquiries at the most likely indicates that a mortgage would also not be suitable for your current financial situation, amount of credit you are currently using, or other concerns. Opening multiple credit cards at once may indicate that you are currently borrowing more than you are able to handle, and a mortgage inquiry would likely also consider an issue that has already caused multiple inquiries to be a red flag. Although this creates a bit of a catch-22 situation, it is usually best to wait until an unusual number of hard inquiries are several months old before attempting to qualify for a mortgage.

Have Errors Fixed

If your credit score is lower than you believe it should be, taking a close look at every negative item may help you locate mistakes that a lender has reported in the past. If you do notice errors that are bringing down your overall credit score, you can dispute them with the credit company, landlord, or other lender to attempt to have them removed from your credit report. You can do this on you grown by contacting the lender directly, but it is often better to work with a professional credit repair company to ensure that you are being as thorough as possible.

A legitimate credit repair company can benefit your life in a wide range of ways. By helping you correct errors and make better financial decisions in the future, choosing this option is one of the most efficient ways to get approved for a mortgage as quickly as possible — especially if your current credit score is holding you back.

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