“5 Tips to Improve Credit in Order to Qualify for the Best Bad Credit Home Loans”
If you are ready to purchase a home however have bad credit there are things that you can do to obtain the home of your dreams. Bad credit can happen to anyone so do not feel like you are alone. Outlined below are five steps on improving your credit so you can obtain a home loan.
- Obtain a copy of your credit report. Each year you can get a free credit report from the three major credit reporting agencies: Equifax, Experian and TransUnion. Go over your credit report with a fine tooth comb and if there are any discrepancies you will need to file a dispute with the creditor. Make sure you send this via Certified Mail Return Receipt Requested and send it three times along with your accompanying documentation that you do not owe what your credit report is stating. Mailing this dispute three times will lengthen the response time to 45 days instead of 30 and by receiving the returned receipt the creditor can not say they never received your dispute if you end up having to go to court. Do this all in writing and not online as you will need a paper trail.
- In the current economy all it takes is one extenuating circumstance to but a black mark on your credit. This could be due to loosing your job or a divorce. Even though you have recovered financially you need to prove to the lender that you are now financially stable. You will need to prove you have been steadily employed for two years and if you have been making steady vehicle payments this will help as well. Make sure you have all of your documentation with you when you apply for a loan. Include in your paperwork your W-2’s, tax returns and a financial statement that shows your income vs. expenses and assets vs. liabilities.
- Obtaining a co-signer who has good credit will help you obtain a home loan. However, trying to find a co-signer is not easy. Co-signers are stuck with the mortgage payments in the event you default on your loan and both you and your co-signer will be saddled with a bad credit mark.
- FHA loans provide a guarantee from the government to the lender for people who are considered ‘high risk’ when purchasing a home. FHA loans require smaller down payments and the down payment can be borrowed or given to you as a gift without penalties.
Start building up your credit. Purchase something wherein you have to make monthly payments such as furniture, car, motorcycle etc. This will show the lender that you are improving your credit by not missing payments. Apply for a credit card as well. Even if it is at a high interest rate, use it once a month and make sure you pay the balance off immediately upon receiving your statement.
Even if you have to apply for credit cards for bad credit it will help your credit report if you keep your balances below 30 percent of your overall limit and make your payments on time.
JC McClain has authored two books on credit cards available at the Amazon Kindle library, Credit Cards For Bad Credit 2013 and Best Credit Card Rewards 2013 McClain has appeared on the nationally syndicated radio financial fitness show sharing his expertise in credit repair. He is also the credit expert for Cloud Technology Systems, Inc.