Review Your Credit Report
First thing’s first: before you start anything else, request copies of your credit report from all three major credit reporting agencies — Equifax, Experian, and TransUnion. Under federal law, you are allowed one free report from each agency annually; if you use up your free report from those companies and need additional copies at a later date, you’ll have to find other sources for the report in order to avoid paying fees to them (your bank, for example, will be able to provide you with a free report annually).
Once your report arrives, go over it with a fine-tooth comb. If you find inaccuracies and false entries, contact the relevant credit reporting agency and ask them to investigate. By law, the agencies are only required to investigate but not necessarily fix any issues you report, so keep this in mind when dealing with them. If you do run into issues that the agencies won’t bother to fix, your best bet is to contact the credit recovery experts at The Credit Rabbi and have them investigate.
Pay Off Delinquent Balances
If you have any delinquent balances associated with your name, get them paid off. Lenders consider delinquent accounts to be a huge red flag, so it would be wise to take care of these as quickly as possible.
Pay All Of Your Bills On Time
Make sure to pay every bill you get on time — credit cards, rent, utilities, car loans, and department store accounts should all be paid as soon as the statements arrive in the mail. Don’t let these bills linger as unpaid, because lenders will look closely at your payment history and will consider any delinquent bills a sign of your financial responsibility.
Stay On Top Of Your Medical Bills
Unpaid doctor and hospital bills will inflate your debt-to-income ratio, so make an attempt to pay any off as quickly as you possibly can. Although some financial lenders will not take delinquent medical bills into consideration when deciding on approvals, mortgage lenders are not among them.
Reduce Your Credit Card Spending
Try to keep the balance below 30% on every credit card under your name. This makes it easier for you to pay the bills off every month, and it shows mortgage lenders that you tend to act responsibly when it comes to spending credit.
Use Your Credit Cards At Least Once Every 6 Months
You need to use your existing credit cards at least once every six months in order for them to remain open and in good standing with the credit card companies that gave them to you. An open account that is in good standing is always a positive sign for mortgage lenders.
Have 2+ Open Credit Cards For At Least 2 Years
To keep a steady and reliable record of your credit card spending, try to maintain at least two credit cards, open and paid off regularly, for at least two years. This way, when mortgage lenders investigate your accounts, they’ll see that you’re responsible enough to hold multiple credit cards without missing a payment.
Don’t Apply For New Credit
Avoid signing up for new lines of credit, whether they’re cards, loans, or some other form. Don’t take on extra debt if you don’t need to, and mortgage lenders will respond positively.
Have A Good Mix Of Credit
Your record should show a good mix of past and present credit, including revolving credit such as a home equity and credit cards, and installment credit from student loans, auto loans, or personal loans. If you can show that managing a number of mixed credit sources is possible, mortgage lenders will see this as a good thing.
Contact A Credit Restoration Service For Help
When you’ve exhausted all of your options and are still unsure about getting a mortgage, it’s time to contact the credit repair specialists at The Credit Rabbi. They can help you clear up your credit through a dependable system that will analyze your records, repair inaccurate accounts, educate you in positive practices, and provide credit tools and effective monitoring for the future.