Repair Your Credit
Many home buyers shopping for a mortgage or home owners looking for a home equity loan have less than perfect credit. If you're one of them, you're in good company. Maybe you missed a few payments because you lost your job, were sick or ran into unexpected large expenses. Or, maybe you've got perfect credit and the credit bureaus have made a mistake on your credit report. Either way, you need to fix the negative items on your credit report before you apply for your mortgage, refinance or home equity loan.
If you're looking for a mortgage or home loan and you haven't checked your credit report, learn how to get a copy of your credit report or check out CreditReporting.com -- they can get all of your credit reports quickly and they're reasonably priced. Making sure your credit report is accurate -- before you apply for your mortgage -- is vital. A recent article in USA Today shows that a consumer group found that "One in four credit reports has errors serious enough to disqualify consumers from buying a home, opening a bank account or getting a job." Make sure errors on your credit report don't keep you from getting the mortgage you deserve.
What Is In Your Credit Report?
- Have you had late payments in the past? Lenders consider your payment history as a sign of how you are likely to repay this loan. If you've paid bills late, had an account referred to a collections agency or declared bankruptcy, these will show up as negative items in your credit report and reduce your credit score.
- How much money do you already owe? Lenders will compare the amount of your existing debt against your credit limits. If you're close -- or at -- your credit limit, that is likely to reduce your credit score.
- How long is your credit history? Your credit score is likely to improve if you have a long credit history. But, if you've just recently applied for your first credit, don't worry. A short credit history may be offset by other factors like on time payments and low balances on your existing loans.
- Did you recently apply for more credit? When some lenders calculate your credit score, they may look to see if you have recently applied for more credit. If you have opened too many new accounts recently, it may lower your credit score.
- How many credit cards or other loans do you have? Having several established accounts usually helps your credit score. But, if your credit report shows too many accounts -- particularly credit cards -- that can lower your credit score.
Credit bureaus can report most negative information in your report for seven years and bankruptcy for 10 years. If you have unpaid judgments outstanding, they can be reported for seven years (or until the statue of limitations runs out if that is longer). There is no time limit for reporting criminal convictions.
Repairing Your Credit Report
You have two options if you need to repair your credit report.
You can do it yourself or you can hire a lawyer. There are law
firms that specialize in repairing poor credit. They will fight
to remove negative, inaccurate, misleading or unverifiable
("questionable") items from your credit reports. Law firms like
Lexington Law Firm
firm
specialize in helping people fix bad credit reports. Both of them
offer to refund all or some of your fees if you are not satisfied
with the results they get fixing your
credit report. Be suspicious of companies that offer an instant
fix for your credit problems. Most credit problems take time and
patience to correct.
If you want to attempt fixing your credit by yourself there are resources available to help you learn the process. One of
the best is Improve Your Credit Scores - Improve Your Lifestyle -- a course by
Stephen Snyder who is one of the top credit scoring experts in the country. His course offers step-by-step strategies that you
can use to quickly improve your credit score.
There are other steps you can take immediately to repair your credit yourself. If you are in debt and can't pay all of your bills, call your creditors immediately. The sooner they know of a problem, the more options you have. You may be able to work out a new payment plan with lower payments. If you wait until they give your account to a collection agency, your options will be very limited.
If you think there is a mistake on your report and it shows an unpaid bill or that you were denied credit when you weren't, write to the company that claims you missed the bill or that denied you credit. Get a receipt for your letter. If you have an account with the company, include your account number, the amount in question, the dates involved and tell them why you think the bill is inaccurate. Be polite and state the facts clearly. It may take several letters to resolve the issue.
If your credit report shows an account or outstanding debt that you don't recognize, request written verification from the creditor. Always send your mail to creditors 'return receipt requested' so that you can prove you sent it.
Always keep all of your original documents like statements, bills and sales receipts. File them somewhere where you can find them again. You'll need to show written documentation to the credit bureaus to correct any problems on your credit report.
Most importantly, be persistent. Fixing problems on your credit report will take time and patience. You just have to follow up on every step and reply to any request from the credit bureau or creditor. Don't give up -- that will make the mistake permanent.
If you need more help, contact a credit counseling organization. These organizations can be found in your phone book, online , or through local universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service. Many of the counseling organizations are non-profit and may be able to work with you inexpensively. Beware of any organization that promises a quick or instant fix. There aren't any.
The Federal Trade Commission offers additional information on Credit And Consumer Rights.
What If Your Credit Can't Be Fixed Quickly?
There are lenders who work with borrowers with less than perfect credit. If your credit score is between 560 and 680, you
should be able to get a mortgage or home loan from one of these lenders.
Countrywide Home Loans' Full Spectrum Lending
Division specializes in helping people with less-than-perfect credit who are seeking home equity or
refinance loans. They work with homeowners to consolidate bills, lower monthly payments or get cash fast from the equity in
their home. They offer free, no obligation quotes from their web site.
Ameriquest Mortgage also works with borrowers
that have credit problems. They're online and they have over 150 branches nationwide. Their web site allows you to request a
quote for your loan -- free and without any obligation. If you're not yet ready to apply for your mortgage, refinance or home
equity loan, our article on getting your mortgage may be of help.
Don't let less than perfect credit keep you from getting your mortgage or home equity loan.