What can I do if I have bad credit? - You may still qualify for a loan, despite credit problems you may have had in the past. In most cases you may qualify for a loan with late payment histories on your credit report, but the lender will want explanations.Many "Subprime" or "Non Prime" banks grant mortgage loans to home buyers with bad credit. These types of "Sub Prime" mortgages usually carry higher interest rates than Conforming home loans, which are often sold to Fannie Mae and Fredie Mac. Many of the "Nonprime" loans are offered with a 2-year fixed rate followed by adjustable rates for the remaining 28 years. These types of bad credit home loans are designed to help poor credit home buyers purchase homes, rebuild or repair their credit profiles during the 2 years fixed rate period, and refinance into a Conforming mortgage with better interest rates and terms.
In some cases a good letter of explanation (LOX) will be accepted by the lender. The letter should explain the circumstances that caused the late payments, foreclosure, etc. If you are borderline eligible for a loan then the LOX may be the fastest way to becoming approved.
You should utilize the free annual credit report and obtain a copy of your credit report at least once per year to check for errors and accuracy of the items being reported. By reviewing your credit each year you can insure you are in a better position to obtain financing for a home. There are many companies that specialize in credit repair that can help for a minimal fee to increase your credit scores also so that you can not only qualify for a home mortgage loan but for a home mortgage loan with a good rate. There are many options available for people with bad credit trying to obtain a home loan. Please call at 888-418-4467 or email at dave@gofirstsecurity.com to find out how much you qualify for based on your current credit.
Cleaner Credit Raises FICO Scores - 8 general guidelines for keeping clean credit
1. Minimize credit inquiries;
2. Pay bills early;
3. Pay off revolving cards monthly;
4. Never close a credit account;
5. Dont switch credit cards to get the best rate;
6. Keep the oldest credit account on your credit report;
7. No more than 2 major bank cards;
8. No more than 50% of your revolving credit limit
Another way to get cleaner credit is to pay down high balance credit cards. Ideally you want your balance not to exceed 33%-50% of your credit limit.
If you decide to pay off a credit card do not make the mistake of closing the account. Having a high maximum credit limit with no balance will help your score whereas closing an account will lower your amount of available credit and can damage your scores.
When you get a copy of your credit report, sit down and review it. If you find any inaccuracies, don't wait to try and fix them. One of the biggest mistakes people make is procrastinating. Errors take time to fix. So take the time to fix them. It could mean a huge difference in your credit score.
Minimize credit inquiries
You should only have your credit pulled when you are ready to act. If you are thinking about purchasing a new car, then you should have your credit pulled and purchase the car within two weeks. If you are thinking of purchasing a home, you should pull your credit several months in advance to check for any inaccuracies. Then have your credit pulled again when you are ready to actually make the purchase. Credit inquiries account for 10% of your total credit score. When the time comes to purchase a new home or refinance your existing home, that 10% could make a big difference.
How did my credit score get so low? - There are many reasons why your credit score may be low. To understand why it may be low in your situation, you must understand how a credit report works, and how credit scores are determined.
First understand that you have not one credit score but three. You have a score with each of the three main credit repositories. These repositories are also known as credit bureaus and credit agencies. The three credit bureaus all hold a great deal of information about you and your financial past and present.
Your credit score is based upon information contained within your credit report. While your credit report shows your financial past and present, your credit score is supposed to determine your financial future. Your credit score is used to determine your likelihood of defaulting on a loan.
Many Consumer Credit Counseling services can have a sizable negative impact on your scores. Only enter these programs if you truly have no other options for paying off your debt.
Credit scores are low often to due to erroneous items on the credit report. Purchase a copy of your credit report. Review it to see if there are false items negatively impacting your score. If you find any error, initiate an investigation by writing to the three major credit bureaus.
If you find your credit score dropping, do not try to get your credit pulled by multiple brokers in an attempt to get approved. This will make your score worse. Going a couple of months with no inquiries will help increase your score.
Even if you are making credit card payments on time, if they are too close to the balance, this can hinder your score. Also, if you apply for credit all the time.
What Is In A Credit Report - Much information is contained in the average American’s credit reports. Among other things, a credit report reflects the activities on an individual’s credit accounts (called tradelines), which include mortgage account, credit card, installment loan such as car loan, and secured or unsecured lines of credits. Information reported include the creditor’s name, account number, type of account, date the account was opened, credit limit, outstanding balance, past due amount, date of last payment, terms of the account, length of account, and number of times of late payments. Besides open tradelines information, closed tradelines histories are also kept in the report.
It is always a good idea to receive your free copy of your credit report to check it for any inaccuracies. Sometimes by fixing any mistakes on the report, your score will increase. It depends on how heavily the inaccuracy counted towards your score.
It is highly important to check your credit at least once a year to check for any errors. If there are any, it is critical to report and dispute these errors so that you may have them taken off.
Credit cards, mortgages, auto-loans and even student loans are examples of what are in your credit report. It shows the balances of each and if you are paying on time.
A credit report will usually also conatain some personal information about a consumer too. Some of this personal information is: date of birth, current address, previous address(es), current employer, previous employer(s), how long at current job, how long at current residence, a general summary of all credit, public records (such as bankruptcies, foreclosures, and judgments), different name variations that you may use or have used, a list of creditors that you have applied for credit with for the past 360 days, and any comments you may have placed in your credit file. Your credit report contains a lot of information about you besides the obvious credit information and your credit scores.
Not all credit reports include scores. Your free annual credit report contains all of your information but omits the scores. The scores can be purchased seperatly for a fee directly from the credit bureaus.
Closing an account will not remove it from your credit report. Also, closing an account may not help your credit score and may actually hurt it.
