Fixing Your Credit
At the same time you’re looking for a lender
who will finance your home with your bad credit, you’ll
also want to move towards improving your credit so that
in the future, you can qualify for lower interest rates
and more favorable terms.
There are hundreds of credit repair agencies that claim
to be able to repair your credit within a matter of
a month or two. That’s impossible, true credit
repair is a time-consuming process, but you should be
able to see real, lasting results in six months, and
experience a real turn-around in a year.
Job stability is a big part of the credit score, so
if it’s possible, try to avoid moving from job
to job. By all means, if you get an offer that pays
double your current salary, take it--but avoid job moves
that provide little incremental benefit. On the subject
of stability, how long you have been in your current
residence, and how long you have been in the general
area are also important to the lender. Avoid moving
from place to place, and make sure the utilities and
phone are in your name.
Make sure you establish some positive credit references,
even if it is only a secured credit card with a low
limit. Try to establish a savings goal and stick to
it, and of course, budget your money at all times and
don’t make extravagant purchases. Your mortgage
lender won’t look favorably on you if you just
bought an expensive new sports car, although buying
a reasonably priced second hand car is usually a good
way to establish a good credit reference.
Obtain a copy of your credit report periodically, and
review it for accuracy. Dispute any erroneous information,
and make note of your progress over time.
Lastly, and this is an item often overlooked, be sure
to maintain a good banking relationship, even if it
is just a simple checking account and a savings account
with a small balance. It doesn’t matter that you
aren’t planning to get your mortgage from the
same bank you have your checking account. Your lender
will probably want to see bank statements, and there
can’t be any overdrafts in there.