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CREDIT
The biggest hurdle in the home buying process is not finding a home or finding a lender. It's your own credit. Since the early 1990's the credit process has been diluted down to a number called a FICO score. All of your debt, available credit, history of payment and recent inquiries are tallied up into a score between 0 and 850. So long as your score is above 640 there is usually no problem getting a loan.
There are 3 major credit repositories : Equifax, TRW (Experian), and Trans Union Corp. Each of them can have different information. They each can also have different errors. In a 1997 study by the Public Interest Research Group (PIRG) 70% of the credit reports they checked had errors that were enough to negatively affect a FICO score.
Checking your score is a fairly simple task. Equifax (www.equifax.com), TRW (www.experian.com) and TUC (www.tuc.com) all offer low cost report service. There are other services that offer free credit reports. .
A good reminder is that every time your credit score is run, it goes against you in your score. When considering a home purchase, have your lender run your credit score and get a copy of the report from all three agency, this way you can shop for the best loan with out lowing your scores. Avoid having your credit report run unnecessarily.
Bad credit is not the end of the home buying process. There are different loan packages for those with less than perfect credit but they come with a price. More out of pocket money and higher rates are usually the tradeoff but it is still possible to get 100% financing with less than perfect credit.
Only time can repair imperfect credit. There is no magic solution and there is no easy way to make legitimate bad credit go away. Only by paying debts on time and paying off debt can improve a score.
To help raise your scores close all unnecessary credit accounts, more then 4 accounts can hurt your score. If your credit cards show late payments consider opening 2 new accounts and charge small amounts and pay the entire balance of each month. This will help raise your credit score in as little as six months.
As a last resort there are agencies that buy homes and rent them to you for 3 years at which time they them sell the home to you. So for more information e-mail us, we will be happy to show you how to own that home you are dreaming about
Resources :
Trans Union Corp · (800) 916-8800 www.tuc.com
Experian (TRW) · (888) 397-3742 www.experian.com
Equifax · (800) 685-1111 www.equifax.com
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