Most people think - mistakenly - that if you have credit
problems, you have to wait 7 years for them to go away. Well,
that's not always true.
Credit repair can help you...once you know how to do it. The
time to clean up your credit and pay off your debts is RIGHT
NOW, before you start looking for houses and applying for
mortgages. Cleaning up your credit and lowering your debt will
help you:
. get a better interest rate
. borrow more money
. and save lots of money in interest
Clean Up Your Credit Report
These days, getting credit is easy. Unfortunately, so is
getting into debt or financial trouble.
But just because you've had some money problems does NOT mean
you can't get a mortgage and buy a house. There are all kinds
of loans:
. loans for first time homebuyers
. loans for people with bad credit
. loans for people with perfect credit
. and loans for people without a lot of money for a down
payment
So, most people can get a loan these days. The question is, HOW
MUCH will you pay in the long run for higher fees and interest
rates?
A lot of people think that if something bad goes on your credit
report, that it must stay there for 7 years, or longer. But
that's not always true. Credit repair can work, if you know how
to do it.
And, you can do it yourself.
For example, I had lots of debt (from a business idea that did
not work) and got a lot of bad credit listings while getting
myself out of debt.
And within 6 months of paying off my last credit card bill
(remember, even if you have some debt you might still be able
to get a house loan) I repaired my credit to the point that I
got both a car loan and a mortgage. More importantly, I got the
LOWEST POSSIBLE interest rates, which over the life of a 30-year
loan could save me tens of thousands of dollars!
How did I repair my credit?
I got a copy of all my credit reports, and kept writing letters
asking the credit bureaus to remove the bad credit.
So it CAN be done. (And I had some pretty bad stuff on my
credit reports.) The worst that can happen is that the credit
bureaus can say "no" to your request. The best that can happen
is that your credit score will improve, and you'll pay a lower
interest rate, get a bigger mortgage, or both!
So, how do you clean up your credit report?
The first step is to get a copy of your credit report from the
3 credit bureaus, listed below. You might have to pay a few
dollars, but it is well worth it. If you moved, changed jobs,
and had any other personal info change recently, you can send
it to the credit bureaus, and request a free copy.
NOTE: You are now entitled to one free credit report each year
from http://www.annualcreditreport.com.
The next step is to circle or highlight the bad credit items,
and write a letter to each credit bureau asking them to remove
the item. If you have a lot, focus on one or two at a time.
Then, wait a month or two, and ask for another one or two items
to be removed.
It might take a few tries.
But if you keep trying, eventually most (or all) of the items
will be removed.
In the worst case - even if you only get a few removed - it
might still improve your credit score, reduce your interest
rate, and lower your monthtly payment!
So don't give up.
It might take a little time to repair your credit - especially
if you've had quite a few money problems. But every little bit
helps your credit score, your interest rate, and the amount of
money you can get.
Then Pay Off As Much Debt As Possible
I know, when preparing to buy your new home money is real
tight. But if you have any extra money - any at all - try to
pay off as much debt as possible. This will help you:
. Be more likely to be approved for a mortgage
. Be able to borrow more money
. Have one (or more) less bill to worry about once you start
having to pay a mortgage every month.
If you can't pay off your debt, you might want to consider
waiting before buying your new home. Or, look into a debt
reduction program that can help you get out of debt faster.
There are no rules that say you can't have some debt and still
buy a house!
But think very carefully about your financial situation. And
TRY to pay off as much debt as possible before buying a house.
There is enough to worry about as a new homeowner, without
having to worry about paying your credit card bills.
At the very least, if you do have any debt, MAKE SURE you can
comfortably afford to pay your credit card bills as well as
your mortgage, before getting started!
About The Author: Kris Bickell is the owner of
HouseBuying-Tips.com, a site that helps first time home buyers
avoid the costly mistakes that many new homebuyers make. For
more tips on buying a house, getting a mortgage, finding a
realtor, and getting out of debt, sign up for the free "How To
Avoid These 10 Costly Mistakes When Buying Your First Home"
email course at: http://www.HouseBuying-Tips.com/course.html. ©
2005 HouseBuying-Tips.com
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