Increase Your Credit Rating And Secure That Great Mortgage

As the housing market deflates and mortgage standards become tighter, it’s becoming more difficult for families with less-than-perfect credit to obtain mortgages and other forms of home financing.

If you’ve been rejected for a mortgage or are scared to even apply because of a poor credit history, keep reading to learn how you can improve your credit and get a mortgage.

Order a Copy of Your Credit Report

Start with a recent copy of your credit report. You can obtain this from a credit reporting agency like Equifax or TransUnion. You’re entitled to one free copy of your credit report every year.

Once you have a recent copy of your credit report, begin reviewing it for older items and possible errors. If you find anything that’s incorrect or possibly misreported, write a letter to the credit reporting agency requesting that it be removed.

The lender involved with that particular entry then has 30-35 days to reply, otherwise the remark is stricken from your credit report.

Getting rid of outdated and possibly incorrect items is an important step toward improving your credit score.

Work on Your Credit

It’s unfortunate, but there is no easy or quick fix to improve your credit. In fact, one of the best credit score remedies is time. With patience and financial diligence, you can improve your credit score in just a short year, or even two.

By paying your bills on time, reducing your debt to credit ratio to 30% or less and focusing on being a quality borrower, you can actually watch your credit score go up month after month.

Things like maxing out your credit cards could actually decrease your credit rating by as much as 70 points. Ideally, you want to have no more than 30% of your available credit used up. So, if your credit card has a limit of $1000, you shouldn’t be carrying more than $300 on it as a balance.

Understand Your Score

Most loan decisions are based on what’s called a FICO score, which is a numerical evaluation of your credit report. This can range anywhere from 300 to a perfect score of 850.

Most Americans, however, have a credit score that falls between 750-799. Scores lower than 600 typically receive high interest rates or are sometimes denied credit all together.

Finally, your home costs will be high enough even if you have a great credit score. So recognize the priority of keeping your rating high, and remember that the best way to improve your credit score is to focus on paying your bills on time for a sustained period. For inspiration, order a copy of your credit report each periodically and watch your credit score grow.