subject: Fairbanks Realtors On How To Improve Credit To Buy A Home [print this page] If you want to purchase a home but fear that poor credit will prevent you from getting financing, don't be afraid. First understand this.
So the deck of cards is already stacked against you. 130 cards that can destroy your credit and only 5 cards that can strengthen your credit. Sounds like a game you don't even want to play does it?
First, you need to obtain a copy of your credit report and contact your creditors. You will need to explain your current situation and offer to pay a percentage of your outstanding bill. Often creditors will settle for 30-40 percent of the total bill. Once you have made your partial settlement payment, get them to issue you a signed settlement letter. THIS IS VERY IMPORTANT. Copies of these letters will need to be sent to all of the credit bureaus (Equifax, Trans Union, and Experian/TRW).
In the eyes of a lender, this is a better method of rectifying your credit than setting up a payment plan though a consumer counseling service. By resolving your own credit problems using the partial payment approach, it demonstrates to lenders your ability to be a responsible credit user. In addition to avoiding the consumer counseling services, you should also avoid filing bankruptcy if at all possible. This act will stay on your credit for a period of 5 to 10 years depending on your state.
So one effective method to redeem your credit status is to go get a secured credit card. Simply just put a deposit down with the bank that you are applying to for the card and the amount that you have in the account is the limit that is on your card. There is no risk to the bank and you get to build credit again.
When searching for a home loan while having credit issues, make sure to deal with local lenders. Have your Realtor recommend a local lender that they work with. They know which ones can get "b" credit borrowers financed at good rates.... They have seen it all. You might be surprised how competitive your rate could be.
So once the process of repairing your credit has began, it is crucial that you make your payments on time. Lenders who have extended a 2nd chance to somebody who has had credit issues in the past will not be so patient with you the second time around. You have now taken control of your finances...DON'T LOSE IT AGAIN! Make sure that you prove to be able to take charge of your credit future.
So when you have demonstrated a pristine record with no payments being late for a year or two. Then you might be able to refinance at rate better than the one you have now. It normally will depend on how much your credit score has improved.
