If you have a low credit score or credit problems as a result of declaring bankruptcy or foreclosing on a home, or if your credit scores have dropped because of late payments or failure to pay, do not despair.
Although a good credit score can drop very quickly, at times taking a hit of as much as 150 points or more, it is possible to improve your credit over time and to qualify for a new mortgage loan. Boosting low credit scores is not the only means for people with deficient credit to get a home loan. The Federal Housing Administration (FHA), in an effort to promote homeownership, has made it easier for people with a damaged credit history to qualify for a mortgage loan. Under certain circumstances, people who have foreclosed or declared bankruptcy can obtain an FHA loan several years earlier than a conventional loan, and these people can buy a home with a smaller down payment.
Credit Scores & Lenders
Credit scores indicate to lenders how well you manage money. You can improve bad credit by demonstrating that you can now handle money more responsibly. Furthermore, since poor credit scores translate into high interest rates on home loans, an improved score will help you get lower interest rates when you are ready to qualify.
How to improve credit scores to qualify for a loan
Here are a few ways people with a negative credit history can raise their credit scores and ultimately obtain financing for a new mortgage loan:
- Improve payment history by making payments on time
- Do not open new lines of credit Use credit cards sparingly, and without overextending credit lines
- Make payments in full Have up to four different kinds of credit accounts
- Show evidence of steady employment for a period of one to two years
- Come up with a budget plan and stick to it
- Build up savings
Insider’s tip: Credit experts advise not spending more than 25 percent of your available credit on any credit card account. If you have a $1,000 maximum in a given account, the balance should not be more than $250-$300. Better yet, wipe the slate clean and carry no balance whatsoever.
Other options to consider
Credit Repair? Nationwide Credit Clearing can help you eliminate any incorrect or negative items on your report, ultimately allowing you to qualify for that home loan.
Give us a call today.
Nationwide Credit Clearing
2336 N. Damen
Chicago, IL 60647
Toll Free: 877-334-3296