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How To Repair Credit Score
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Bad Credit Home Loan To Get You Out Of Debt
A "bad credit home loan" can help you climb your way out of debt and get you started back on the road to upstanding, good credit. There are many lenders who are willing to make bad credit home loans to you - a loan based on your equity in your home even if your credit has slipped or isn't as perfect as it could be. By taking out a bad credit home mortgage or home equity loan, you can consolidate a... Read article
Bad Credit Home Loan To Get You Out Of Debt
A "bad credit home loan" can help you climb your way out of debt and get you started back on the road to upstanding, good credit. There are many lenders who are willing to make bad credit home loans to you - a loan based on your equity in your home even if your credit has slipped or isn't as perfect as it could be. By taking out a bad credit home mortgage or home equity loan, you can consolidate a... Read article
How To Repair Credit Score
A bad credit score can really affect your ability to create the life you want. You will be turned down for loans, or given very high interest rates. Buying a house, a car, or even finding investors for your business becomes next to impossible. There are even some employers who look at credit score as an indication of your character and sense of responsibility.
So how do you improve your credit score? Ironically, one of the steps you should take is to get a credit card. It's true: misusing credit cards can really lower your credit score...but with enough credit card savvy, it can also help you repair it. Each time you successfully pay your bill, or accumulate months or years of "clean" credit card use, then your score improves.
Of course, it may be difficult to get approved for a credit card with a bad credit score. One option is to get secured credit cards. These require you to put up collateral like a security deposit which are equal or even higher to your credit limit. Some examples of possible security deposits are cars, jewelry or stocks.
Secured credit cards will not really have very high credit lines, but that is okay. Your purpose in getting one is to improve your score, which means you should be paying the balance in full each month anyway. In fact, it is advisable that you leave your credit card at home, at least until you have your spending habits in full control.
If you need a higher credit limit (for example, if you use it to pay all your bills so you only have to worry about making one payment a month, or if you are a businessman who frequently travels) you can ask for a higher limit after you have developed a consistent record of regular payments. However, bear in mind that too high a credit limit may encourage you to rack up those charges.
Another alternative to secured credit cards are prepaid cards. Here, you determine your credit line: how much you transfer will define how much you have to spend. This is an excellent way of rebuilding your credit history and sticking to your budget. They also do not charge finance fees, but they may require an application fee. If you go over your limit, you may also be charged a fine. Always read the fine print before signing up for a prepaid card.
Responsibly using your new credit cards is a good step towards credit repair. However, it's not the only thing you need to watch. You should pay your utility bills on time, and avoid getting any disconnection notices. To avoid late payments, enrol your bills in an automatic debit arrangement These fees will be deducted from your salary account. It's very convenient (you don't have to worry about writing checks or lining up at payment counters). Also avoid applying for several loans at the same time, or using more than 30% of your credit card balance.
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Improve FICO Score Before Shopping for Home
It always is exciting to begin looking at homes for sale in your area, bigger and perhaps nicer than the property you currently own. Before you let the excitement carry you away and make an offer for homes for sale, first check your FICO score to ensure you can purchase homes for sale at the best rate.
If your score is below 600 for any reason, you need to take corrective action. Better to put off looking for homes for sale, until you can purchase one at a good rate. Otherwise, you will be paying thousands more than necessary for your homes for sale over the life of the mortgage. A score below 600 puts you at a disadvantage with homes for sale lenders; but with dedication and lots of effort on your part, you can improve your FICO score and get the better mortgage rate and terms for your homes for sale. This article gives you ways to improve your FICO score and your credit report.
Payment History
Your payment history accounts for 35 percent of your FICO score and has the biggest impact on purchasing homes for sale. It covers your timeliness of payments, bankruptcy, liens, wage garnishments, collections, delinquent accounts, and the severity of the delinquencies - all very important data to the homes for sale lender. Do the following to improve your payment history:
- Catch up any delinquent bills and make them current. Begin with the revolving credit accounts and then the smallest to the largest account balances. Then, stay current.
- Begin paying all bills on time.
- If you find yourself having financial problems, contact your creditors immediately - before you are late on payments. They can help you with temporary remedies that may not impact your credit rating. If you are truly in debt and do not know what to do, contact a reputable credit counselor, generally a nonprofit firm, to help you learn to manage your finances responsibly.
Even after you pay off collection accounts, they may impact your ability to purchase homes for sale. They will remain on your credit report for seven years.
Total Amount Owed This accounts for 30 percent of your FICO score, a big factor when buying homes for sale. It covers how much you owe and how many of your credit lines are being used. Improve this area by:
- Keeping your debt-to-credit ratio low. Otherwise, if you have a total credit availability of $20,000, for instance, and total owed of $10,000, then your ratio is 50 percent. High ratio percentages are negatives to homes for sale lenders. At the most, 75 percent is barely acceptable to the homes for sale lender; 35 to 25 percent is best. So, pay down your total debt to improve this ratio, lowering your credit card debt first.
- Pay off your debt. Do not just move it around. The debt-to-credit ratio makes it useless to move what you owe from one credit to another.
- Leave unused credit card accounts open, especially when they show a good credit history in the past. Close them and you do two things - (1) raise your debt-to-credit ratio by lowering your credit availability, and (2) it wipes out the history for the cancelled accounts, if no balance.
- Do not open new credit card accounts just to increase your credit availability level, especially if you do not plan to use them. Too much credit capacity is as high a risk to homes for sale lenders as a high ratio.
Length of Credit History
How long you have been establishing credit accounts for 15 percent of your FICO score, as well as how active your accounts have been. Do the following to improve this section before buying homes for sale:
- Do not open a lot of accounts too rapidly. It will lower your average account age, especially if you have established credit in only the past few years. It also makes you look risky to homes for sale lenders.
- If you have older accounts that you do not use, consider making small purchases and paying them off within six months to continue building a positive credit rating.
- Avoid offers for new cards. Too many credit cards make homes for sale lenders see you as a disaster just waiting to happen.
- Additionally, the longer you pay your bills on time, the more improvement you will see in this sector of the FICO score.
New Credit
New credit accounts for 10 percent of your FICO score. It covers how many new accounts you have opened and what types of credit lines they are, as well as how many recent inquiries have been made against your credit. These are inquiries initiated, because you attempted to secure credit (for example, you applied for a credit card - whether the application was rejected or accepted). Improve this segment by:
- Rate shopping for credit within a focused period of time of 14 days or less. When looking at homes for sale, many people "check out" loans over a long period of time, especially if they are not in a hurry to buy. It makes it look to homes for sale lenders as if you are constantly looking for more credit. Ensure the inquiries show up on your credit report within a short span of time, so that homes for sale lenders know you were shopping for a single loan.
- If you need to re-establish credit, open one or two accounts only. Then, manage them responsibly by keeping the purchases small, the account balance low, and make your payments on time. Also, pay at least a bit more than the minimum payment.
Type of Credit
Another segment that accounts for 10 percent is the type of credit accounts you have. This includes major credit cards, retail cards, mortgage, equity lines of credit, any installment loans, and so on. Improve your credit mix by:
- Having one or two credit cards. It is ironic that homes for sale lenders are leery of people who do not have credit cards.
- Installment loans (for example, a car loan) is better than revolving debt (such as, open-ended credit cards).
- Certain finance company debts (such as buying a large appliance from a retailer with in-store financing) can lower your FICO score.
- A good credit mix shows you can handle multiple credit lines responsibly and usually includes one to two credit cards, one department store card, and an installment loan. If you try to enhance your credit mix, remember to do so slowly over time; otherwise, it becomes a red flag for the homes for sale lender.
- Closing undesirable accounts does not drop them from your credit report. If you have a balance or have shown a late payment history, they remain and continue to be used as part of the FICO scoring.
Improving your FICO score before looking at homes for sale ensures that you will pay a lot less money over the life of the mortgage. It is worth the dedication and effort required.
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit http://www.twtrealestate.com
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