Repair Credit Issues
Learn if there are any issues. Take action to fix the problems.
Improve and fix credit problems
Work with a mortgage professional to improve and fix credit problems. They will help with specific actions to take to improve and fix credit problems. Some general ways to work on the problem are first find out if there are problems. Check your credit report.
Get copies of your credit report--then make sure information is correct. Make sure to check all 3 national credit reporting companies. There may be a problem one has that is fixable, if it is known.
Go to www.annualcreditreport.com. This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every twelve months.
You can also call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
One of the most important things a person can do to improve their credit score is pay bills by the due date. Delinquent payments and collections can have a major negative impact on a credit score.
Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
Understanding how credit score is determined can help with improving and fixing credit problems.
Credit score is usually based on the answers to these questions:
Do you pay your bills on time? The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.
What is your outstanding debt? Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.
How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.
Have you applied for new credit recently? If you have applied for too many new accounts recently, that may negatively affect your score. However, if you request a copy of your own credit report, or if creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.
How many and what types of credit accounts do you have? Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.
Protect your credit information from fraud and identity theft. Use strong passwords for financial information.
It takes time to improve credit scores. Find out early in the home buying process to give the necessary time to improve and fix any credit issues. The negative information on a credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries take time to repair.
Actually, the credit score is not rebuilt. The credit history is rebuilt, which then is reflected by the credit score. The length of time to rebuild a credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to a credit report, such as a delinquency or collection account. These new elements will continue to affect a credit scores until they reach a certain age.
• Delinquencies remain on your credit report for seven years.
• Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 10 years.
• Inquiries remain on your report for two years.
Pay bills on time and wait. Time is the ally in improving a credit scores. There is no quick fix for bad credit scores. Don’t make any bad financial decisions when trying to buy a home. Bad information travels fast to the reporting agencies. Ignorance is not a good thing when dealing with credit. Use the tools to find the credit history and score. It is the path to home ownership for most people.
Without a mortgage it is impossible for most people to buy a home. Learn to improve and fix credit problems to keep the dream of home ownership alive.