How To Raise Credit Scores To Qualify For Mortgage

This Article On How To Raise Credit Scores To Qualify For Mortgage Was Written By Gustan Cho NMLS 873293

How To Raise Credit Scores To Qualify For Mortgage? I get many inquiries everyday by home buyers who have decided to become home owners and who were turned down by other lenders because they did not meet the minimum credit scores. The question on How To Raise Credit Scores To Qualify For Mortgage is so common. The good news is that I can help any borrower who needs help and are willing to cooperate. How To Raise Credit Scores To Qualify For Mortgage? We will cover the various solutions to this question on How To Raise Credit Scores To Qualify For Mortgage. Raising one’s credit scores is a two way process where the loan officer will need full cooperation from the borrower. There are many tricks of the trade that can be quick fixes, however, it cannot be done overnight. On this blog on How To Raise Credit Scores To Qualify For Mortgage, I will geared this for both my viewers and news letter subscribers as well as for my new loan officers who just joined The Gustan Cho Team with CrossCountry Mortgage NMLS 3029 and are ready to train as licensed loan officers.

Reasons For Raising Credit Scores & How To Raise Credit Scores To Qualify For Mortgage

There are two main reasons why borrowers need to raise credit scores and we will show you on How To Raise Credit Scores To Qualify For Mortgage on this BLOG:

  • The first reason and most common reason is because they need to qualify for a mortgage loan program and they cannot meet the minimum credit score requirements.
  • The second reason why borrowers need to raise credit scores is because of trying to get the very best mortgage rate possible, especially for homeowners who are looking to refinance their current home loans into a new mortgage loan with a lower mortgage rate.

Almost all mortgage loan programs has pricing adjustments based on the borrowers credit scores. Consumers should always be conscious of their credit scores, not just when qualifying for a mortgage loan, but always because good credit and high credit scores will have an impact on your insurance premiums.

  • Interest rates you get on credit cards, auto loans, installment loans is affected by your credit scores
  • Many employers, especially government employers like Police Departments, Fire Departments, Regulatory Agencies will thoroughly review a job candidate’s credit scores and overall credit payment history during the employment hiring process.
  • All loan officers and those in the financial sector industries will have job applicants submit to credit background checks as part of the hiring and/or promotional process.
  • When it comes to lending or obtaining credit, the higher your credit score is, the lower your interest rate and fees will be.

How Can I Raise My Credit Scores To Qualify For Mortgage On Home Purchase

If you intend in purchasing a home, plan many months ahead in evaluating your credit scores and credit report.

  • Raising your credit scores cannot be done overnight and may take several months.
  • There is exactly no timeline on how long it will take to raise your credit scores.
  • It may take one person 45 days or longer to fix their credit but may take several months for other folks.
  • A consumer’s credit score is a combination of multiple factors on a person’s credit report.
  • If you are currently in the mortgage process or about to begin the mortgage process, you can raise your credit scores but your mortgage process may be delayed if you are in a hurry to fix errors on your credit report or raise your credit score.
  • There are many tools and analyzers like the FICO Analyzer that an experienced loan officer has access to these days that all borrowers will assist in ways of boosting a borrower’s credit scores by simply doing minor things such as paying down credit cards or adding yourself on to another person’s credit card as authorized users.
  • We will cover a quick emergency fast track method of improving your credit and boosting your credit scores and we will also discuss ways of maintaining good credit and always trying to maintain a high credit score.

Always Be Conscious Of Your Credit Scores And Develop Positive Habits To Maintain Your High Credit Scores

Consumers need to always keep in mind that any derogatory credit on your credit report will remain on your report for a period of seven years. This includes a late payment, which can plummet one’s credit scores. It is always easy to forget a $10 dollar minimum monthly payment but not paying that minimum monthly credit card payment can not just plummet your credit scores but that 30 day late payment will remain on your credit report for 7 years. Developing positive habits with regards to your credit is the best policy for good credit. You should monitor your credit report like you monitor your bank and investment accounts.

Here are some tips in maintaining good credit and higher credit scores:

  • Realize the importance of having good credit and make sure that you monitor your credit scores and credit report like you are monitoring your bank and investment portfolio account.
  • Set up auto payments for the minimum payment due, pay down your credit cards and try to stay at a 20% credit utilization ratio, do not apply for a bunch of credit regularly because each hard credit inquiry will drop your credit scores, and never close out a revolving credit account even if you have to pay an annual maintenance fees.
  • Monitor your credit report regularly. You get a free credit report every year from each of the three credit bureaus.
  • Take advantage of that and get one from each of the three credit bureaus every four months so you can monitor your credit report three times per year.
  • When you review your credit report, make sure that it contain no errors and if it does, get the facts and proof and dispute it with the credit bureaus that is reporting the erroneous information.
  • Make sure you consult with your loan officer before you dispute anything during the loan process or are about to start the loan process.
  • If you have bad credit, no credit, just filed bankruptcy, had a recent foreclosure, deed in lieu of foreclosure, short sale, had recent collection accounts, charge offs, or other derogatory credit, start re-establishing credit by getting new credit.
  • Getting several secured credit cards is the best way of re-establishing new credit.
  • Also, taking out a higher interest loan will re-establish your credit profile. These higher risk loans are called alternative lending financing and although your interest rates may be in the double digits, it is good for you to start establishing credit history.
  • Get into a habit of paying every bill you have on time, including your cell phone bills, utility bills, and insurance bills.

Avoiding Negative Routines And Learning On How To Raise My Credit Scores To Qualify For Mortgage

Here are tips to the question on How To Raise Credit Scores To Qualify For Mortgage:

  • If your credit scores are below 700 FICO and you do not have any active credit tradelines, do not apply for unsecured credit cards.
  • If you get denied for a credit card, do not keep on applying for others because each hard credit inquiry is a 2 to 5 point drop off your credit score.
  • Do not max out your credit cards because part of your credit scores is the amount of available credit you have.
  • Your credit card balance should remain at or below 20 percent of your credit limit.
  • Do not close out credit card accounts without credit balances even though you do not use them and have to pay an annual fee.
  • Part of your credit scores are derived with the age of the credit tradelines and available credit on your credit cards.
  • Do not do credit disputes prior to, or during the mortgage process on non-collection accounts and charge offs because this will put your mortgage process on hold until you have the credit disputes retracted.
  • Once the credit bureaus correct your errors on your credit report or if they decide to leave the derogatory credit item on your credit report, retract the dispute verbiage off your credit report.

Tips On How Do You Raise Credit Scores To Qualify For Mortgage

There are several tips on how do you raise credit scores to qualify for mortgage. However, you need to realize why your credit scores are low.

Here are some questions you need to ask yourself and see if the reasons below are reasons why your credit scores are low:

  • Is it because of no credit tradelines?
  • Are the credit scores low because the credit cards are maxed out?  
  • Is it because of recent collection accounts and charge off accounts?
  • Is it because of because of a recent judgment?
  • Is it because of an old collection account that got re-reported as a new collection account because it was sold to a new collection agency?
  • Is it because you just paid a partial payment on an old collection account?

The above are a few reasons why your credit scores may be low. We will discuss some solutions on how do you raise credit scores to qualify for mortgage.

How Do You Raise Credit Scores To Qualify For Mortgage When You Have No Credit Tradelines?

Your credit scores may be very low because you do not have any credit tradelines.

Here are some bullet points you need to consider:

  • You can not have a late payment and pay all of your bills that do not report on your credit report on time and still have low credit scores.
  • The key here is that you need to add new credit that add to your credit report and your credit scores will increase.
  • How do you get new credit if your credit scores are low?
  • The easiest and fastest way of rebuilding your credit and boosting your credit scores when you have no credit is by getting secured credit cards.
  • For maximum credit boost, you should get at least three secured credit cards with each credit card having at least a $500 credit limit.
  • Always have a little balance on your new secured credit cards.
  • Less than $50 dollars on your credit card balance will maximize your credit scores. Never have a zero credit card balance.

Adding Yourself On As An Authorized Credit Card User

Adding yourself on as an authorized credit card user can be a great tool to boost your credit score only if the main user is your spouse or someone who lives together with you. Credit bureaus have gotten wiser with consumers adding themselves on as authorized credit card users to boost their credit scores so if you have a different last name and do not live together with the main user at the same place, adding yourself on as an authorized user will serve no positive purpose in boosting your credit scores. However, if you have the same last name as the main credit card user and have the same address, then it can definitely increase your credit scores.

Credit Disputes To Increase Credit Scores

There is a short term fix in boosting your credit scores with credit disputes . However, this method is cheating the system to qualify for mortgage and once the disputes are resolved, your credit scores may go back down. Lenders will use the credit scores that they initially pulled for a period of 120 days so it is alright for your credit scores to drop during the mortgage process. Here are some bullet points to consider when trying to boost your credit scores by disputing exempt line items allowed under FHA Guidelines On Credit Disputes:

  • This is not a long term solution but does work to get an instant boost in credit scores.
  • FHA Guidelines on credit disputes state that you can have credit disputes on medical collections and non-medical collections accounts with zero balances .
  • However, you cannot have credit disputes on any non-medical collection accounts if your outstanding balances are over $1,000 or you have charge off accounts.
  • The reason why the mortgage process comes to a halt when you have credit disputes is because the credit bureaus will take the derogatory credit account off the credit scoring formula but the derogatory item will remain on your credit report.
  • Since the derogatory credit item under credit dispute will not be counted on your scoring of your credit scores, your credit scores will instantly go up.
  • After the credit dispute is resolved and if the creditor verified your derogatory as being valid and it remains on your credit report, the credit dispute verbiage will be marked as resolved so therefore the derogatory item will remain and that item will be counted back into your credit scoring formula.
  • Since the derogatory credit item is being counted into your credit scoring formula, your credit scores will then drop because it is like adding a new derogatory credit item on your credit report.
  • This is the case if you have a credit dispute and need to retract it off your credit report for your mortgage process to proceed.
  • When you retract a credit dispute, then your credit scores can drop and sometimes it will plummet depending on how bad the derogatory credit item is.
  • If you need to boost your credit scores to qualify for a mortgage and need a few points boost, review your credit scores and see if you have any recent medical collection accounts and/or non-medical collections with no balance.
  • If so, dispute your derogatory medical collections as well as derogatory credit items with zero balances and your credit scores will go up.
  • Also, if you have non-medical collection accounts with a total outstanding collection balance of under $1,000, then you can dispute those derogatory credit items and your credit scores will go up.
  • Sometimes it may jump over 70 or more FICO Points depending on how recent the collection account is.

Tips On How To Raise Credit Scores To Qualify For Mortgage: Contact Us

This blog on How To Raise Credit Scores To Qualify For Mortgage was written by Gustan Cho. For more tips on boosting your credit scores on advice on how to raise your credit scores to qualify for mortgage, contact Gustan Cho NMLS 873293 and The Gustan Cho Team at CrossCountry Mortgage at 262-878-1965 or you can text Gustan Cho on his cell 262-716-8151 for faster response. You can also email Gustan Cho at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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