Repairing Credit for Purchasing a New Home
Is your less than satisfactory credit score preventing you from purchases a new home? Get back on track with this guide to repairing credit.
Since you’re looking into repairing credit before buying a house, you obviously have a lot of questions. For instance, how do you do it?
How can credit repair companies help? Are these services worth it or should you fix your bad credit yourself?
And is credit repair even necessary or are you fine to buy a house with bad credit? What is the lowest credit score to buy a house, anyway?
Those are too many questions to answer here in the article intro. Fortunately, you will find the answers to these and any other questions you have in the full article below. Before you apply for a mortgage, read and follow these tips for fixing bad credit.
1. Know What Score to Aim For
Whether a credit score is “good” or “bad” is based on the opinions of various financial institutions. Here’s a general chart that illustrates what score you should be aiming for.
- A 300-579 FICO score is considered very poor
- 580-669 is considered fair
- 670-739 is considered good
- 740-799 is considered very good
- 800+ is considered excellent
Your personal score is based on your money borrowing habits, especially how faithful you are at repaying what you owe. We’ll explain the specific factors that influence these scores later on.
But, basically, if you do well at borrowing/repaying, your score goes up. If the opposite is true, your score goes down. A 0 score means you have never borrowed before.
What Is the Lowest Credit Score to Buy a House?
Really, what counts as an acceptable score when applying for a home loan depends on the lender. Some lenders may even offer “bad credit home loans.” But most lenders want to see a score of at least 580 or higher.
Does Repairing Credit Before Buying a House Matter?
Since you can plausibly get a bad credit home loan, you may be wondering if it matters to repair your credit before applying. Well, yes, it absolutely does.
First, your credit score determines the interest rate that lenders are willing to offer you. The lower your score is, the higher the interest is. Even if you do get approved with bad credit, your higher interest rate will add thousands of dollars more to the total loan amount.
Also, bad credit will get you denied time and time again. In the time you waste getting denied by lenders, you could be repairing your credit for a better rate, anyway.
2. Know Your Current Credit Score
You can’t improve your credit score if you don’t know what it is. Go to AnnualCreditReport.com for a free and complete copy of your credit report.
This is the only site you should ever use to do this. It is authorized by the government for this purpose, whereas similar sites might be run by scammers to phish for your financial information.
Besides, it’s free. So you have no reason to get a report elsewhere.
At AnnualCreditReport.com, you may download a fresh copy of your credit report weekly from all three credit bureaus: Equifax, Experian, and TransUnion. Plus, it will not lower your credit score to do this.
3. Hire Fast Credit Repair Services
The remaining tips will be ways in which you can fix bad credit on your own. But before we get to those, we want you to know that there’s a better option: credit repair services.
The main reason is that repairing credit takes time. If you’re an amateur, it takes a lot more time. But the experts at credit repair companies like Credit Repair Sweep can significantly raise your score within 3 months.
If you need your bad credit fixed fast, don’t DIY. Hire credit repair experts instead.
4. Find/Fix Credit Report Errors
If you do attempt to overcome bad credit without help, you’ll need the report you got from AnnualCreditReport.com. You will be reading through it to check for errors, so it’s best if you print it out. That way, you can mark where you left off when you take a break from this very boring tedium.
Read through each of the 3 reports and mark anything that doesn’t look right or doesn’t agree with the other 2. When finished, look into your marked errors to try and figure out what’s going on.
Reporting Marked Errors to the Credit Bureaus
When you are sure that you have errors you can’t account for, you can report them to the credit bureaus to have them removed. Then, any negative impact these errors had on your credit score will be gone, too.
Specifically, go to the website of the credit bureau that issued the report and get their contact information. Mail/email an official error removal request, including:
- Printed copies of each mistake
- Details on why the reported information is wrong
- Your request that they be removed
- Your contact info
Additionally, here are some official instructions from the government on how to do this.
5. Start Paying on Time
All that’s left now is to improve your borrowing habits. The number one way to do this is to start paying your bills before the due date. Each and every time payment is past due, it reduces your credit score.
6. Pay Off Outstanding Accounts First
For this same reason, you need to pay off those old, past-due accounts as soon as possible. This is now your primary financial focus.
7. Increase Your Borrowing Limit
Getting a new credit card or upping your limit on your current card helps your credit. That’s because it improves your credit utilization ratio (the difference between your current debt and your available credit).
Repairing Credit Is Essential For Purchasing a New Home
Repairing credit before buying a house is both necessary and possible. Use the tips you learned in this guide to fix your credit so you can buy the home of your dreams.
Furthermore, as mentioned in tip number 3, our fast credit repair services are the best option for getting the score you need. To get started, contact Credit Repair Sweep right now.
