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Aim planing to buy a house and plan to pay 20% down but i need to repair my credit .whats the best way to star |
Aim planing to buy a house and plan to pay 20% down but i need to repair my credit .whats the best way to star As long as your credit is above 500 you can buy the house now. That mortgage reporting to your credit will rapidly increase your score- much faster than small credit cards as long as you pay on time. You would generally want to opt for a 2 or 3 year ARM loan to benefit from a lower interest rate and it gives you a fixed period of 2-3 years before the rate can adjust. During that 2-3 year period your credit should improve so that you can refinance into a better fixed rate. You will also have more equity in your home that you could use to pay off bad debts to further increase your score. Bottom line is a mortgage payment made on time will increase your score much faster than anything else. Source(s): www.nlgmiami.com I'm a broker Try these guys... they rock and if they can't help they'll tell ya. Check out the website for good info. They help people all over the US. www.crsgroup.net If you're interested call their office: 1-800-573-2006 credit cards (low balances, make purchase of $25 or less and pay off each month), buy something that reports to the credit bureau each month (my daughter brought a car and paid a month early -- each payment looks like it's early now), make sure you are never late with your utility payments, car insurance, etc. Be sure to not apply to too many different places for credit right now as every time someone looks at your report, your score goes down. Try to stay in the place you are at for at least 1 year or more. Get a free credit report. Determine what debts you have out there and see if all accounts are in good standing. Then take a look at your debts and determine the highest interest rate. You want to start paying that one off first and foremost. Start with a big chunk towards that debt, and put smaller chunks towards the other debts. DO NOT close or cancel any credit card accounts. This will lower your credit score. If you see that some credit cards have been inactive, start using them and paying them off immediately. Pay it on-line right away instead of waiting for the bill to arrive. If I were you, I'd put that 20% payment that you were going to use for the house, and use it to pay off all of your debts. The only advantage you get from making a down payment, is lower monthly mortgage payments. (Trust me everyone will tell you to hold on to that down payment. Earn interest on it yourself, instead of giving it all to someone else). Instead, if you fix your credit and pay off all your debts, you will get a lower interest rate, thus making your monthly mortgage payments lower and you end up even and with a clean slate. I hope this helps! 22 year old homeowner with great credit. There are any number of websites where you can get a copy of your credit report for a nominal fee (there are a lot of "free" sites, too, but they usually require you to subscribe to a service.) Look for one that includes all three bureaus so you know everything that is being reported about you. Once you have your credit report in hand, look for any collection items and pay these off (they could be anything from unpaid parking tickets to bounced checks.) Make sure you get a written receipt as collection agencies tend to be pretty lax about reporting a previously unpaid collection as paid. If you currently have credit cards, make sure they are current and that you keep them that way. If, for example, you are 30 days past due on a card, you will have to make a double payment to get current. If you just pay the minimum each month, you will remain 30 days past due perpetually. New "lates" lower your score much more than old ones do, so the longer you go without any late payments, the less your previous lates will count against you. Also, be aware that the proportion of outstanding balances to credit limits is a huge factor in credit scoring. If your total credit card limit is $2,000, you should try to keep your total credit card balances to $1,000 or less (anything over 50% will lower your score.) Of course, if there is anything on your report that is reported in error, contact both the creditor doing the reporting and the bureaus in writing. Don't let go of those until they have been cleared from your report. As for buying the house, 20% down is sort of a "magic" number... anything less and your credit will matter a lot more. But at 20% a fair number of sins are forgiven because the more you have invested in the home the less likely you are to allow yourself to get into default. Unless your score is very low, you are likely to find financing with that down (especially if it's coming from your own funds rather than a gift.) Once you get your home, make sure your mortgage payments are on time ALL the time; a paid-as-agreed mortgage will do wonders for your credit profile, but a mortgage late will be a red flag next time you buy or refi. |
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