Open Collections And Bad Credit
Many home buyers think that just because they have bad credit and open collections that they do not qualify for a mortgage loan. This is absolutely not the case. Most banks do not want to touch any mortgage loan borrower with open collections or bad credit. However, there are many mortgage lenders that will grant a mortgage loan approval with open collections or bad credit if the open collections and bad credit has been aged. By aged, we are talking more than 12 months. The older the open collections accounts and bad credit is, the less impact they will have on the borrowers credit scores and less impact in your mortgage underwriting processes.
Get New Credit To Offset Your Bad Credit And Open Collections
When a mortgage lender underwrites your mortgage loan application, the underwriter will see when the date of the last activity was on your open collections accounts and late payments. As long as your open collections, late payments, charge offs, and other bad credit items have been isolated to a certain time period and limited to that time period and you have re-established your credit since then, you should have no problem in getting a mortgage loan approval. However, if you have a history of late payments and open collections throughout the years, then it shows that you are financially irresponsible and you might have a hard time getting a mortgage loan approval. If you had gone through a period of financial hardship such as a job loss, divorce, or medical problems and it resulted in getting your credit bruised, the past thing to do is to start re-establishing your credit by getting new credit. Start developing a good payment history with the new credit you get.
How Do I Get New Credit If I Have Bad Credit And Have No Credit
This is a great question and dilemma most folks with bad credit and open collections have. How can you get new credit and re-establish new credit when your credit scores suck and nobody is willing to grant you credit? The best route to take is getting secured credit cards. Secured credit cards are like regular credit cards but you need to put a deposit down with the credit card company and the secured credit card company will give you the same amount of credit on the amount of money you deposit with them. For example, if you put a $500 down payment with the secured credit card company, the secured credit card company will get you $500 secured credit card limit. I strongly recommend at least 3 secured credit cards with $500 credit limits. Each one of these secured credit cards will boost your credit scores by a least 20 to 40 points and your credit scores will gradually increase as you develop timely payment history with these secured credit card companies. Secured credit cards are available here at www.gustancho.com . The secured credit cards on www.gustancho.com all report to all three major credit reporting agencies. If you decide to get other secured credit cards, make sure they report to all three major credit reporting agencies.
Re-Establishing Credit After Bankruptcy And/Or Foreclosure
You need to realize that it will be extremely difficult for you to get a mortgage loan if you have a late payment or open collections after a bankruptcy and/or foreclosure. There are exceptions where a mortgage lender will approve you if you had one or two late payments or open collections after a bankruptcy or foreclosure but only if you can write a believeable letter of explanation with documented facts and reasoning behind your open collections and late payment.