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Rebuilding Your Credit and Buying a Home

Rebuilding Your Credit and Buying a Home

March 31st, 2015 | Home Buying Tips, Credit

Have you faced some financial difficulties in recent years but still want to buy a home with a mortgage in Utah? Here are some tips:

Order your credit report. Under federal law, you are entitled to one free credit report each year from all three credit-reporting bureaus: Experian, Equifax, and Trans Union. Simply go to Annualcreditreport.com to request your free copy, which you can access within minutes online or elect to have it mailed to you. Your credit report details your payment history – the good and the bad. Be sure to check for any errors and report any inaccuracies.

Order your credit score. The next thing you’ll want to do is obtain your credit score, the three-digit number representing the quality of your credit record. When you order your score, you will be given specific tips on how to improve it. Consider this your action plan; these are the things that will help you improve your score the most. You can order your score from any of the credit-reporting bureaus, or from credit-scoring company Fair Issac.

Avoid piling on the debt. Go easy on the debt following any type of financial difficulty. Now more than ever, you’ll want to demonstrate your ability to effectively manage your existing debts. Keep the amount of your available credit that you use low in relation to your overall credit limits.

Make payments on time. Making payments on time can have a big effect on improving your credit score. In fact, the last two years’ worth of payment history is a big factor in determining whether you qualify for another home loan. As your payment history and credit score improves, you’re also likely to qualify for lower interest rates on a variety of consumer loans.

Start saving. This doesn’t help with your credit score. But it will help if you want to buy a home. The bigger down payment you have saved, the more likely you will be able to qualify for another home loan. In fact, depending on the circumstances, you may be able to qualify for another home loan in as little as two to three years after a short sale or foreclosure!

Not all mortgage loans have the same credit and credit score requirements. Remember, a loan such as a Utah FHA mortgage allows for lower credit scores and more derogatory credit.

Rebuilding your credit won’t happen overnight. But it can happen in a lot less time than you might think!

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