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Ways Of Boosting Credit Before Applying For Mortgage

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Ways Of Boosting Credit Before Applying For Mortgage

This BLOG On Ways Of Boosting Credit Before Applying For Mortgage Was Written By Apryl Boyce

If your credit has gone to the dogs, fixing it can be as easy as 1, 2, 3. Apryl Boyce advice on Ways Of Boosting Credit Before Applying For Mortgage.

Someone once said a person’s credit is a reflection of their character. There are a number of reasons or life circumstances which can make a persons credit score drop. Those who are in the market for a home mortgage, a car loan, car insurance or renting a home credit score can substantially
affect their chances of approval. A person’s credit dictates the price they pay in any of these circumstances. No matter what has happened in life it is always possible to get up, dust yourself off and start over. A home purchase is hands down most folks’ largest investment in their lifetime. Boosting Credit Before Applying For Mortgage is key in not just qualifying for a mortgage but to get the best rates possible.

Importance Of Credit Score When Applying For Mortgage

Two of the most important factors for home buyers is credit and income.

  • Those with poor credit and/or outstanding collections and charged off accounts can qualify for mortgages without having to pay them off
  • Home Buyers need to meet minimum credit score requirements to qualify for home loans
  • Lenders understand periods of bad credit in the past by borrowers
  • However, mortgage underwriters want to see timely payments in the past 12 months
  • Mortgage Borrowers can get an approve/eligible per Automated Underwriting System with outstanding collections and charged off accounts as long as they have re-established credit and timely payments in the past 12 months

A credit score does not reflect a persons character, but perhaps is an outcome of our life circumstances. The absolute best thing to do is to accept the past and change the future by taking the necessary steps to improve one’s credit moving forward. By being proactive and taking charge of one’s credit. they will be putting themselves into a better position for qualification of a home loan in addition to improving on many of their opportunities for savings in consumer choices.

Ways Of Boosting Credit Before Applying For Mortgage: How I Got My Credit Scores From 550 To 700 In A Year

Let us look at 3 things which has helped a borrower to go from a 550 credit score to a 700 in one year. The first step is to take a deep breath and know that the future is bright!  Next, consider a few of the steps one can take to start putting their score on the up swing!

The following are options to take to turn your credit around:

  •  A secured credit card:
    • The best chance of getting a credit card once credit score has
      dropped is to take the time, money and effort to get a secured credit card and start building credit back.
  • Google, secured credit cards:
    • one of the easiest to get is Open Sky Visa
    • Plan on sending the amount of money seek for credit to the credit card company, that
      will become credit limit
    • Use the card a few times a month but keep the balance below 10% and pay the card off in full each month
  • Self Lender
    • There is a company called self lender where one can set up a small CD account
    • For a small initial fee consumers will make monthly payments for one year
    • At the end of the year the money will be mailed back to consumer with a small amount of interest.
    • Self Lender is a great tool to use when wanting to get one’s life back and credit on track
    • Self lender can help credit scores as much as a 100 points a year or more.
  •  Lexington Law
    • What a gift this company is to the credit challenged
    • You have probably heard of Lexington Law and maybe you were skeptical
    • They are a company that works for you, for a small monthly fee they will work on behalf to challenge the items on credit report and have them removed
    • This service can be very helpful and worth a small investment monthly to save the borrower money in the long run by improving credit profiles
    • Ultimately home ownership is a dream everyone deserves
    • If your credit is stopping you from finding the home of your dreams there are things you can do to improve your odds and your interest rate in the future
    • “Our greatest glory is not in never falling, but in rising every time we fall.” Confucius

Minimum Credit Scores Required To Qualify For Mortgage

There are minimum credit score requirements to qualify for home loan programs:

  • FHA requires a minimum credit score of 580 to qualify for 3.5% down payment home purchase loans
  • Borrowers with credit scores under 500 and 579 are eligible for FHA Home Loans with 10% down payment
  • USDA requires 580
  • The U.S. Department of Veteran Affairs does not have a minimum credit score requirement
    • However, most lenders will require a minimum credit score requirement on VA Loans such as 620 to 640
    • The Gustan Cho Team at Loan Cabin Inc. has no mortgage overlays on government and/or conventional loans
    • To get an approve/eligible per Automated Underwriting System Findings, it is best recommended that veteran borrowers have a 580 credit score
  • Non-QM Loans require minimum credit scores of 640 for 20% down payment, 660 for 15% down payment, 680 scores for 10% down payment
  • Bank Statement Mortgage Loans for self employed borrowers require 620 credit scores

About The Author: Apryl Boyce

Like to thank Apryl Boyce for writing this blog on Boosting Credit Before Applying For Mortgage. Apryl Boyce is a contributing editor and staff writer for Gustan Cho Associates Mortgage & Real Estate Informational Resource Center and The Gustan Cho Team.  Apryl has over 10 years of experience as a residential and commercial loan originator. She took a break from the mortgage industry after the 2008 Real Estate & Mortgage Meltdown and is now getting back in the mortgage business. Apryl will be sharing her knowledge in mortgage and real estate on Gustan Cho Associates.

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