In financially trying times like these, many people I talk to have a blemish or two on their credit report. Depending on the severity, it can affect the home buying process in a challenging and sometimes negative way. Past bankruptcy or foreclosure, if recent, can prevent buying a home at all. Sometimes it’s just a lack of credit history that poses a problem.
Having a bad credit score doesn’t mean you can’t buy a home, it just means you may have higher interest rates, higher down payments, or more stringent underwriting. Don’t let credit problems ruin your dreams of buying a home. There are things you can do to increase your credit score and set yourself up for better lending.
How do you improve your credit score? If you want to improve your credit score, Fair, Isaac offers these tips:
- pay your bills on time
- make up missed payments and keep all your payments current
- maintain low balances on credit cards and other “revolving debt”
- pay off debt rather than transferring it to a new account
- don’t close unused credit card accounts just to raise your credit score
- don’t get new credit cards that you don’t need just to increase the credit available to you
- see more tips in “Understanding Your Credit Score” on the Fair, Isaac website, www.myfico.com.
Finally, don’t give up hope just because you have a bad score. If you think there are mistakes on your credit report, you can get a copy of the report, fix the problem, and explain the situation to the lender. Some lenders may override credit scores if they think you are a good risk despite problems with your score. I work with one of the best Mortgage Brokers in Utah so if you are thinking of buying a home but are unsure of your credit worthiness call me and we’ll take a look at your situation together.
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