Ways Of Boosting Credit Before Applying For Mortgage
This Article Is About Ways Of Boosting Credit Before Applying For Mortgage
Gustan Cho Associates Has Special Tricks On Ways Of Boosting Credit Before Applying For Mortgage. There is no need to hire expensive ineffective credit repair companies to increase your credit scores. Credit repair is not needed to qualify for a mortgage with bad credit. Outstanding collections and charged-off accounts do not have to be paid to qualify for a mortgage. Oftentimes, credit repair does more harm than good for those trying to qualify for a mortgage. The key in getting an approve/eligible per automated underwriting system is to have been timely on all payments in the past 12 months.
Older collections and/or derogatory credit tradelines have little to no impact on the borrower’s credit scores. In this article, we will discuss and cover ways of boosting credit scores before applying for a mortgage. It is best to maximize one’s credit scores so one can get the lowest mortgage rates. Credit scores have the biggest impact on pricing on mortgage rates.
Applying And Qualifying For A Mortgage With Bad Credit
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 that can make a person’s 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 getting the best rates possible. Lenders judge their credit risk based on the borrower’s credit scores. Credit scores are derived from the borrower’s payment history, credit utilization ratio, types of credit they have, the longevity of credit established, and the number of derogatory credit tradelines. Older derogatory credit tradelines have little to no impact on the borrower’s credit scores.
Importance Of Credit Score When Applying For Mortgage
Two of the most important factors for home buyers are 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 person’s 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 that have 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 upswing!
The following are options to take to turn your credit around:
A secured credit card:
- The best chance of getting a credit card once your 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 sought 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 Credit Rebuilder Program:
- 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 consumers 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 100 points a year or more.
Stay Away From Credit Repair Companies
Lexington Law is a credit repair company that is not frugal in advertising. Many consumers have heard of Lexington Law and dozens of other credit repair companies. Credit Repair is not required to qualify for a mortgage with bad credit. Consumers with challenged credit often hire Lexington Law. It is not necessary for borrowers to hire credit repair companies.
Oftentimes, credit repair companies do more damage than good during the mortgage process. You have probably heard of Lexington Law and maybe you were skeptical. They are a company for a small monthly fee they will work on behalf to challenge the items on the credit report and try to have them removed. Removing older derogatory credit tradelines has little to no impact on your credit scores. This service can be a total waste of time and money.
There is nothing credit repair companies can do with active late payments. They dispute derogatory credit tradelines in hopes of getting them removed. Ultimately homeownership 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:
- HUD, the parent of 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 a 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
- Gustan Cho Associates 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 an associate contributing editor and staff writer for Gustan Cho Associates Mortgage & Real Estate Informational Resource Center and Gustan Cho Associates Mortgage Group. 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 with Gustan Cho Associates.
August 13, 2021 - 5 min read