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How Can I Improve Low Credit Scores To Qualify For Mortgage

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How Can I Improve Low Credit Scores To Qualify For Mortgage

This BLOG On How Can I Improve Low Credit Scores To Qualify For Mortgage Was UPDATED On April 15th, 2019

By Gustan Cho

Having low credit scores today is a major hurdle. Those who have low credit scores are not alone. There are ways to Improve Low Credit Scores To Qualify For Mortgage.

  • Millions of Americans have low credit scores where they do not meet minimum credit score requirements to qualify for mortgage
  • The good news is that there are many ways to improve low credit scores to qualify for mortgage
  • Having low credit scores is not a permanent problem
  • There are many quick fixes in improving and boosting credit scores and we will show you on how to improve low credit scores to qualify for mortgage
  • Consumers with low credit scores do not have to hire expensive credit repair consultants
  • Whatever a credit repair professional can do, they can do it themselves
  • Credit repair consultants can most likely do it faster
  • They may know the tricks of the trade
  • Many of those who want to improve low credit scores to qualify for mortgage may not need the help of a credit repair consultant
  • Ways to  Improve Low Credit Scores To Qualify For Mortgage may just take just paying down credit cards, or adding new credit
  • Consumers with no credit or limited credit may have to add more credit
  • Adding three secured credit cards can be the quickest fix on how to Improve Low Credit Scores To Qualify For Mortgage
  • Or on other cases, the credit bureaus may be reporting incorrect information on credit report
  • That may be the cause of low credit scores
  • Some consumers are victims of identity theft
  • They might not realize that someone else is using credit and personal information to open up new credit
  • Creditors may be reporting wrong information to the credit bureaus such as the following:
    • late payment when you were never late
    • credit tradelines that do not belong to them
  • We will cover the various ways on  Improve Low Credit Scores To Qualify For Mortgage in the quickest amount of time

Strategies In Improving Low Credit Scores

Consumers with no credit or had prior bad credit and decided not to get new credit and pay everything in cash, chances are they will have lower credit scores:

  • Even with great payment history in the past, consumers with no revolving credit will have lower credit scores
  • Consumers with periods of bad credit due to a job loss, bankruptcy, foreclosure, or medical issues and have not gotten new credit can easily boost your credit scores by adding new credit
  • Secured Credit Cards is the easiest and fastest way of building credit

How Can With Bad Credit?

Mortgage lending guidelines state that after a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, or periods of bad credit need to have re-established credit. Many lenders have credit tradeline overlays. Three to five established credit tradelines seasoned for at least 12 months is what lenders want to see:

  • Common sense question is how can I get new credit in order to re-establish my credit with no credit due to bankruptcy and/or foreclosure and recent collections
  • No unsecured credit provider will grant credit for a consumer who has just gone through periods of bad credit
  • The best way to add positive credit is by getting secured credit cards
  • Secured credit cards are the fastest and easiest way of getting credit or re-establishing credit after a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, or periods of bad credit
  • Each secured credit card, depending on the consumer, can boost a person’s credit score by at least 20 or more points initially
  • As the credit payment history ages, the person’s credit scores will keep on going up
  • It is recommended that the consumer gets at least 3 to 5 secured credit cards with at least a $500 credit limit

Paying Down Credit Cards Will Boost Credit Scores

Maxed out credit cards are the main reasons of lower credit scores:

  • This is a temporary problem
  • Credit scores will go right back up the following month once credit card balances are paid down
  • Credit utilization ratio is how much of the available credit on credit card is being used and counts 30% of overall credit score
  • If the credit balance is close to credit limit, credit score will be low
  • The higher available credit limit is, the higher the credit scores
  • It is strongly recommended not to have credit balances of greater than 10% credit balance

Recent Late Payments

One recent late payment on a credit card, installment loan, or any other credit payment can lower credit scores by at least 50 or more points. Late payments will be reported on credit report for seven years.

  • Consumers with good long term relationship with a creditor who just forgot to make a payment and that payment are reported 30 days or more late, contact the creditor and ask them if they can, as a one-time courtesy, remove that late payment
  • Consumers without any prior late payment with that particular creditor and this was a one-time mishap, the creditor will most likely show goodwill and have that late payment removed
  • If the customer service representative refuses to do so, ask to speak to a supervisor.

Pay For Delete

Borrowers who are required to pay off an old collection account by their lender due to their overlays can do so with a pay for delete. What this means is that the creditor will remove the collection or charged off account if consumers pay the outstanding debt.

  • This action is known as pay for delete and is done all the time
  • A collection agency or creditor do not care about what is on credit report as long as they get their money so this should be a quick fix
  • They are not going to volunteer that they will do a pay for delete
  • Need to demand it and use it as part of the negotiation

Pay Bills On Time

Borrowers need to realize how important it is to pay minimum monthly payments on time.  One late payment will not only devastate and drop credit scores but when it comes to qualifying for a mortgage, it can set borrowers back 12 months.  Many mortgage lenders will not approve a mortgage loan to anyone who has not had at least a 12 month on-time payment history.  Some lenders will go as far as requiring a 24 month on-time payment history.

Borrowers do not have to pay outstanding collections and charged off accounts to qualify for mortgage with lenders with no mortgage overlays. The Gustan Cho Team has no mortgage lender overlays on government and conventional loans. Please call us or text us at The Gustan Cho Team at 262-716-8151 or text for faster response to qualify for mortgage. Or email us at gcho@loancabin.com.

Related> 9 Fast Fixes for your Credit Scores

Related> Credit cards for bad credit

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