Owning your own home is a dream come true for many of us. We love the thought of creating a space that is a vision of our perfect environment; the right flooring, the right paint color, the right kitchen, etc. A place we can live a full life with our loved ones.
Somehow, renting just isn’t the same.
There are many reasons for renting rather than owning. However, bad credit shouldn’t be one of them. A bad credit score can be a temporary status.
The first step in the process of buying a home is getting pre-approved for a loan. Owning a home may seem out of reach if your credit score needs improvement. What you should know is that in several months to a year’s time, you can improve your credit score by taking a few simple actions. Improving your credit will not only increase your chances for getting approved, it will also help you get a better interest rate that may help keep your payments affordable.
You can improve your credit status by downloading your report for free from several places. Study your credit report and clean it up as much as you possible. Inspect every single item and verify that everything is accurate, including your name, Social Security number, current and previous addresses, list of employers, debts and any public records concerning you. You may discover errors on your credit report – errors that adversely affect your score. These errors could be caused by simple mistakes, but they can also be due to identity theft.
Either way, you need to find out. To get your FICO credit score, visit www.myfico.com.
If you do find errors, keep careful notes and send letters to the agencies responsible for the errors. Keep copies of everything you do. Go as far as sending out letters via certified mail. If the credit reporting agency cannot verify the questionable information that you are disputing, they should remove it, and they only have 30 days to respond to you. This task may seem like a hassle, but it is a task that will help you not only purchase your home, but put you in a better credit situation for the long-term.
Next, try to pay down or pay off as many debts as you can on your report. You may not be able to get all your debt paid off completely, but if you can show that you aren’t “maxed out” on most of your creditors, you should be able to improve your score. Your credit score is typically affected by payment history, outstanding debts, length of credit, the types of credit you’ve used, and the amount of new credit you have. Try to fix as much as you can. If you need help, there are plenty of credit repair companies available to do the leg work. When you feel like you’ve done everything you can to fix your report, let some time pass and then download your credit report again; you should see your score improve.
Once your credit score improves, you are on the way to owning a home! You can get pre-approved for a home loan before you ever look at a single house. The next step is to get yourself a pre-approval certificate. Remember “pre-qualifying” is not the same as getting a pre-approval letter.
If you have any questions about getting pre-approved for a home loan. Please feel free to contact us!