Minimum Credit Score For a Home Mortgage Loan – Part 2
This is Part 2 of “What’s the Minimum Credit Score For a Home Mortgage? “
Review your credit regularly to make sure your spending is in check. Make sure it is and accurate also. Report errors promptly to the credit bureau(s). Errors are not that uncommon, so don’t feel awkward about reporting them and requesting corrections.
One good way to enhance your credit, is to use a obtain credit card. It works almost exactly like a debit card because the account is secured by your own money. Your spending limit is the amount you place into the account. If you use all the money in the account, your card will be declined. Having card declined is a warning sign that your spending is out of control. The best way to use a obtain credit card is to use well below the limit. Experts recommend spending 30% or less of your limit. So, if you have a secured credit card with $1000 limit, keep your balance below $330. Try to pay the balance in complete each month. That will give your credit a good raise within six months.
If you have a bankruptcy in your past, just know it will be two to three years before you will be ready to apply for a home mortgage. Some close friends of mine went by it. Together they earned six figures. Their spending was unrestrained. He had to have every techno-gadget imaginable. On top of that, He is a musician. She was into decorating. They both lost their jobs within three months of each other, and the next thing you know they had to file bankruptcy.
For the next two years, they rented a tiny house. They drove beat-up cars. They ate a lot of rice – quit eating out. Lunch was a brown bag. When the bankruptcy attorney called, they called right back. They kept a close eye on their credit, and never missed a bill. It was humbling, but ultimately they were able to joke about it. That two years is over now. They are moving into their own home next month. Their two years of discipline paid off. And they will tell you they are all the better for having gone by it.
Bankruptcy is hard to conquer, but there are associate of item that can ruin your credit as long as they are on file. One is a “charge-off'”. Charge-offs are accounts that have been labeled uncollectible. They will kill your credit. How do you fix a charge off? Pay the bill in complete. Period. The other deal killer in a credit file is an account that has been handed over to collections. How do you fix this problem? Pay the bill in complete. Period And already then, it is up to the creditor that you owe to notify the credit bureau to take the strike off of your credit.
Take a thorough breath, call the creditor and humbly ask them to work with you. Most will do just that. Just be honest and do what you say you will do. One important thing is to get the creditor to agree in writing to delete the charge-off once the account is paid in complete. Do that before you start making payments.
The examples in this article were meant for the purpose of showing how to keep your credit score high, and how to repair damaged credit. Some will take years to qualify for you mortgage, some are really close, and some are ready now. You can’t know where you stand if you don’t know your credit score.
If your score is below 640, I nevertheless recommend talking to a mortgage broker. He can guide you in a step by step course of action to raise your credit scores. They know what a good credit file looks like. They can guide you in identifying problematic items on your credit report, and will work with you long term to correct them. Find out what your credit score is. You never know, it may be higher than you think.