Credit Repair Can Be Scary…
The idea of getting a home loan straight up scares most people. Not because it’s a loan and you’re borrowing money, but because of a variable rate that lenders give you.
A small fractional difference in rate, which might not look much on paper, can cost you in five figures in terms of interest payments over a period of a decade.
You’re guaranteed to get a higher mortgage rate if your credit report has blemishes on it. If you’re not satisfied with your credit score and want to qualify for a lower mortgage rate, here are some things that you can do to improve it:
- Have a History – Build up a history of ‘good credit use’. Lenders look for good borrowing habits before giving loans and deciding on a mortgage rate.
Having timely payments, no matter how small they are, indicates good borrowing habits and you are more likely to receive a lower mortgage rate if you have good financial past. Lenders want to see if you’ll return the payment on time…and what better predictor of a person’s future than his past habits?
The urge to stick to a single credit card might be strong, but keep all of your credit cards active. Every so often, make a timely payment on each one of your cards. The more timely payments you have, the better it will reflect on your credit report.
- Pay Taxes on Time – Not much explanation need here, but people tend to forget the tax department and how it relates to credit. Simply, not paying tax in a timely manner is an offense and it doesn’t take time for it to creep up in your credit report and deduct some major points.
Paying taxes is a sign of a good citizen and lenders love good citizens. Plus, you don’t want the IRS on your bad side.
- Validate it – If you believe the statistics, 71% of credit reports have errors in them which are either intentional or genuine mistakes. It’s best to make sure all items on your credit reports are accurate, verifiable up to date and complete.
- Ask – This is where you request the creditor to remove a bad item in your credit report. Most people don’t think that it would work, but you’d be surprised.
See, as much as it sounds hard to believe, creditors are also humans just like us…..
…..with fears, frustrations and put their pants on one leg at a time. They know that it can get tough to make timely payments every single time.
If you explain your situation and request them to take off the negative item, who knows, they might do it. But also remember that they get that kind of request all the time, so prepare accordingly.
Remember – Ask and it shall be given. And the reverse is equally true – You can’t have what you don’t ask for. Try it.
You got nothing to lose.
Which finally brings us to something that ties it all in…
- Don’t Get Derailed – I know it goes without saying but the human brain works in bizarre ways….doing something good can give us the license to be bad.
Some killer psychology there.
When your score’s improving, you start feeling good about it and what do you do? You ride the wave of positive emotion by going out and doing some ‘Emotional Shopping’; buying a bunch of stuff you don’t need. Sounds counter intuitive, but it’s true. When its all working out for you – you’re making timely payments and you’re on your way to a better credit – don’t get carried away.
I know I said 5 but here’s a bonus one for ya…
- Get a Secured Credit Card – A secured credit card is just a fancy term for a debit card. If you lack the financial control to use a credit card, go for a secured credit card.
You use that card when you have money in your account. This way you only use what you already have and no type of borrowing ever occurs. This should be the last resort because it limits your options, but can be good if you’ve got a string of bad decisions in the past and don’t think that you’re capable of handling a credit card….
…..because hey, you can’t spend what you don’t have, right?.
That is a lot of information. Read it again if you didn’t already.
Now, can you do all this yourself? Absolutely, if you have the time and energy to go out and wrestle with the law. It’ll be frustrating at times, actually most, but you’ll eventually get it done.
But if you value your time and don’t want to deal with the hassle of everything, why not work with an expert? Someone who knows the ins and outs of the law and will help you all the way through the end until your credit report has been rid of all the black dots?
Like the idea?
Get your free consultation now. In 10 short minutes one of our experts will lay out a concrete plan of how you can improve your score within a matter of weeks.
P.S. – And let me know what you think of the post in the comments section. I’m listening.