How to Improve Your Credit Scores to get a mortgage!
When you are applying for a mortgage the first thing that you need to do is check your credit report. You are by law entitled to one free credit report per person per year by going to www.annualcreditreport.com . Be sure to check all 3 bureaus to get a full picture of your financial status, credit history and credit scores. An Excellent Credit score is between 720 and 850, a Good Credit score is between 660 and 720, a Fair Credit Score is between 580 to 660, a poor score is between 520 to 580 anything under a 520 is considered extremely poor and definatly needs to be improved. You can improve your scores on your own. If it becomes to painful search for help there are legitimate non profit agencies that can help you. There are also legitimate companies that charge and they are good too but you have to do your research, go to credit forums and get recommendation. If your going to fix your credit yourself go through the credit report and thoroughly review it to get a complete understanding of how you are with your bills. If you pay all of them on time and if not, when did you run late and be honest with yourself as to what the circumstances were at the time and why you ran late. If you have open collections on your credit report, call each collection agency and settle on the balances. Collection agencies are always willing to settle for less than the balance due as long as you are able to pay the settled balance immediately. Collection agencies will settle with you as long as you promise to pay a certain amount every pay period. Even if you can settle one collection account at a time do it. Take a certain amount of your pay and dedicate it toward getting that bill paid off. If you are in the above situation make a commitment to yourself to do this as soon as possible. We find in our research and with past users that when they are committed to pay one collection account a month they were able to pay off and settle everything they had past due within 6 months. This gave them a better chance of getting approved for a mortgage. If there are additional lates on your credit report that are unknown to you, research the accounts that are late. There is a chance that these accounts have been incorrectly reported as a late to the bureau's by the financial institution. These mistakes are easily disputed and resolved by sending a certified letter to the bureau concerning the mistake. When disputing be sure to to put the name of the institution, account number, the date and the amount of the late that is being reported. Make sure to send the letter through certified mail so they have to sign for the letter and this way you have a record of sending it. According to the Fair Credit Reporting Act the bureaus must respond back to you within 30 days. Keep a credit file and keep accurate records of everything. With today's technology the credit bureaus can easily remove any error's and your credit can be fixed. Once you have completed the above and everything is paid in full your credit report should be cleaned up and your credit worthiness will be in much better shape. Now that all of the disputing has been done and your credit is cleanup it is time to re-establish your credit. There are many ways to do this but it depends on your credit scores at this point after the clean up. There are some credit card companies, such as Orchard Bank or Capital One who will offer you a credit card to help you re-establish your credit. They will offer you either a secured or unsecured credit card and these cards come with high interest rates and fees however, they do report your on time payments to all of the bureau's. Again you are in the process of re-establishing your credit. These kinds of cards are actually an excellent way to help you improve your credit rating and therefore raise your scores. You will need atleast 2 to 3 credit cards to accomplish this. If you do get a credit card to re-establish your credit do not charge up the entire card. In order to improve your credit scores you much only charge a little tiny bit and than pay it off completely at the end of the month. Never charge the entire balance and never go over the entire balance. A secured credit card is a card that is issued against a type of savings or checking account that you have deposited your own cash dollars into. These accounts act as collateral which makes your credit card secured. For example, you can give the bank $500 dollars of your own paycheck and the bank will turn around and lend you back your own money ($500 of your money plus $50 in interest for the bank) at the same time you will pay them monthly fees and interest and they will report your on time payments to the 3 major credit bureaus which are Transunion, Experien and Equifax. However, if you run late on your payments or if you do not pay, the bank is able to withdraw the amount you owe out of the money that you have in your checking or savings account. Most banks participate in this program. A secured credit card is usually offered and issued if your credit is extremely poor. An unsecured credit card is a card that is issued to you at a very high interest rate and a low spending limit. It acts exactly like a credit card. It is wise to use the credit card but only on something that costs $50.00 (such as a tank of gas and McDonalds for lunch) and than at the end of the month pay off the credit card and than put the card away. Do not use the card again for an entire year. Do not close the credit card out keep it open but do not use it. The only reason you would use this is to re-establish your credit. The bank will report your on time monthly payments to the credit bureaus and your scores will improve. Another option is to get unconventional tradelines to report to your credit bureus some examples of unconventional tradelines would be car insurance payments, daycare payments, cell phone bill payments, rent payments, etc...This is rarely accomplished but possible. These are some simple easy steps to get you on your way to a better credit rating, better scores, and into the home of your dreams.
