Fast Credit Repair for Home Loan Approval
Buying a home can be one of the defining moments of your life. Whether you’re moving in with a spouse, upgrading to a larger home, or moving to a new area, purchasing the home of your dreams is something you’ll never forget. Unfortunately, your past sometimes gets in the way. Very few people can afford to buy a house outright, so almost everybody takes out a loan. When you do, the bank will check your credit and choose to approve or deny you. While seeking a bad credit mortgage loan is an option, the smarter bet is utilizing fast credit repair strategies that increase your odds of home loan approval and favorable interest rates. Below, we explain how to make that happen.
Search For Errors in Your Report
Before using any fast credit repair options, you need to know what your score is. To do so, visit AnnualCreditReport.com. This website is your best tool because it is 100% free. While many other credit report providers advertise themselves as free, they usually add on hidden fees right before they deliver your documents.
One thing to note is that the site mentioned above only gives free reports once a year, so if you obtained one in the last 12 months, you might have to use a paid option. Once you submit your information, you will receive a report from the three largest credit bureaus in the country: Equifax, Experian, and Transunion.
A low score will likely lead to a bad credit mortgage loan with high interest. If you have a moderate or high score, then your home loan approval chances will rise dramatically. To help better your understanding, your credit report provider will explain what score ranges constitute bad, fair, good, and excellent.
Upon obtaining your report, you should search for any errors. The best way to do so is to print the documents out and use an old-fashioned highlighter. If you come across a piece of information that doesn’t look right, highlight it and move on to the other sections. Once you’ve scanned the entire report, go back to each highlight and investigate the issue.
For some of them, you will realize that they were not mistakes after all. For others, you will confirm that they are errors. Typical problem areas include name, social security number, address, employer, debts, and financial transaction history. Each of these issues could lower your score significantly, so searching for them is crucial.
Dispute Those Errors
The luckiest of you will find that you have a high score and do not need to explore a bad credit mortgage loan. For others, your score will be quite low and may inhibit your future home loan approval. No matter what score you receive, you should still check for errors. Most likely, your report will be mistake-free, but there is always a chance that it will not. If you find discrepancies in the data, then you must send a message to the credit bureau that has them on file. Here’s how:
- Research Mailing Addresses – Before mailing a letter, you need to know where it is going. To do so, visit the websites of each of the three credit bureaus and search for their mailing addresses. Alternatively, you can find all three below.
P.O. Box 7404256
Atlanta, GA 30374-0256
P.O. Box 9701
Allen, TX 75013
P.O. Box 2000
Chester, PA 19022-2000
- Present Each Mistake Clearly – This is a critical step, as you need the bureau to fix every error, not just some of them. To ensure this happens, arrange your letter in a clear, organized manner. If there are multiple mistakes, give each of them its own bullet point or number, so none of them get lost in the shuffle.
- Tell Them What You Want – The typical request is to have them remove an item from your report. This is not the case every time, though. You may decide you want a different type of correction, so be clear about what you want.
- Provide Proof – If you send in a letter without proof, you have no chance at having your error corrected. For this reason, you must back up your claim with data such as payment records, loan information, or legal documents.
For easy reference, take a look at this sample letter from the Federal Trade Commission.
One more thing to note is that there are professional financial services that can complete this task for you. If you have the money and are short on time, you should consider using one of them. No matter what you choose, you will have taken your first fast credit repair step towards obtaining a home loan.
Analyze Your Credit Score
After correcting any errors, you will have an accurate credit score. These scores range from 300-850 depending on your financial habits and history. The following is a standard assessment of score ranges:
- Bad: 300-629
- Fair: 630-689
- Good: 690-719
- Excellent: 720-850
Your score tells lenders how safe of a lending partner you are. For those of you with low scores, you will have a hard time obtaining a home loan approval. Moderate scores more often lead to acceptance but could constitute a bad credit mortgage loan with a high interest rate. If you have a rating below the excellent range, you should look into fast credit repair methods. First, let’s explain what affects your score. The five aspects that do, along with their percentage of contribution, are:
- Payment History – 35%
- Current Debts – 30%
- Length of Credit History – 15%
- Kinds of Credit – 10%
- New Credit – 10%
Identify Bad Habits
At this point, your report is error-free, and you understand what your score means. Next, you can start utilizing fast credit repair methods to raise that score. To do so, look at the five aspects above and compare them with your report. From here, you can determine which of them are your problem areas and which are not. Next, you can start to solve those problems. Raising your score from very low to moderate will give you access to a bad credit mortgage loan. If you continue on your journey, your home loan approval will be a formality, and your interest rate should fall significantly.
Target Issues One by One
The following are the best credit repair strategies for each of the five areas described above:
- Payment History – From now on, you must pay all of your bills on time. That applies to credit cards, cars, and any other loan you have.
- Current Debts – Paying on time is not enough, though. Instead, you must work to reduce debt. You can do this by creating a budget that gives you extra money to pay down debts at the end of every month.
- Length of Credit History – There isn’t much you can do about this factor. If you already have a credit card, then you should keep using it responsibly. If you do not have any credit history, consider applying for a credit card.
- Kinds of Credit – If you have multiple types of credit, like a card and a car, make sure to pay both of them. Doing so will tell creditors that you can handle various kinds of debt.
- New Credit – If you take out too many lines of credit, you will experience a penalty. To avoid this, don’t apply for any new credit cards, no matter how enticing their offers are.
While raising your score through fast credit repair methods may seem daunting, it will undoubtedly pay off in the long run. If your score is low enough, you might never obtain home loan approval. Even if you raise it to passable levels, you will still have to settle for a costly bad credit mortgage loan. To remedy this situation, you need to adopt responsible habits going forward. Once you do, you will give yourself the gift of excellent financial health.