Credit Repair For Home Loan Approval

Repairing and rebuilding credit scores yourself is free and something anyone can do. By law, you’re entitled to free copies once per year through annualcreditreport.com. Once you have your reports, order your credit scores through a third party authorized website, which is typically offered to you on the site, once you order your credit report.

With a copy of your reports from Equifax, TransUnion and Experian, start by reviewing your report for any discrepancies. Look for errors and inaccuracies like wrong name, address, accounts showing twice, collections which continue to be reported twice for the same account, and the like. If you find errors, you should send a certified letter to the credit bureaus asking them to investigate and correct the problem. Certified letters can be sent by going to your local postal service; send the letter, “certified with a return receipt.” This means you will receive notification when the letter is successfully delivered. Send a separate letter for each error you find. This may be more time-consuming, but you will get better results.

Once a disputed best is verified, you can arrange to pay off any old debts through a negotiating tactic known as “goodwill letters.” Negative items on your credit report that are accurate can be legally, ethically and permanently deleted through goodwill letters. Respectfully state how you were late, or how you were delinquent, and what you’re doing to correct your bad habits. You can offer to pay the debt, or settle for a lesser amount of what is owed, in exchange for the creditor removing the negative remark from your credit report. This may not work on every creditor, but it is certainly worth a try. 

Be sure to pay your bills on time each month. If you are able to, pay the balance in full, doing so has a greater impact than paying your minimum payment. Your payment history accounts for 35 percent of your credit score. Do not charge more than 30% of your available card balance. Charging more than 30%  Lower credit utilization is considered shows that you’re doing a good job of managing your credit responsibilities. A higher rate could cause other lenders to view you as someone who struggles to manage your finances, thus resulting in less chances of being approved for new lines of credit. Your overall credit history (all available credit lines), should not exceed more than 10% overall.

Avoid Doing These Things: Closing accounts. Closing accounts hurts your score. Instead, pay off the balance, leave the account open, and remove the card from your wallet. This will help ensure that you will not use it.

Do Not Apply For Several New Credit-Card Accounts At Once: FICO does allow you to rate shop. You can apply for 10 different mortgages in a 45-day period and it only accounts as one inquiry under FICO guidelines. You can also apply at 20 different car dealerships a car loan, and again, it only accounts for one inquiry. This is not the case with revolving credit. With revolving credit it’s the more inquiries you have in a 12 month period, the lower your FICO score.