Raising Your Credit Score To Buy A Home

How to prepare to get a mortgage from bad credit to adequate credit. You get three credit scores, one for Experian one for TransUnion and one for Equifax. Lenders don’t just look at one of those scores we look at all three and take the middle score so if you have a 680 a 652 and a 620, we’re going to use the 652 as your score.  We’re not going average them out not all companies report your credit information to all three credit bureaus. There’s always going to be a little bit of a variance if you only had two scores, we’re going to only use the lowest of the two. So establishing credit is going to be the biggest part.

Everybody starts from zero. Everybody starts with a fresh slate. Start by having a parent co-sign with you on a car or a credit card or have you as an authorized user if you’re really just starting it from scratch may be getting a secured credit card is the best way to go. Yes, it’s going to be a very small limit but it’s gonna give you the chance to establish credibility for yourself if you’ve had a bankruptcy, foreclosure, short-sale, you’re going to need to re-establish your credit, basically start from scratch all over again getting one of those cards or have someone co-sign with you. Imagine that if you were giving somebody a loan would you want to look at your own credit and say “yup that’s a person ready to pay off a loan”.

So what we’re gonna do is talk about mortgages today how amazing they are how fun they are how much fun you can have with them. you can buy a house buy another house and then you can also refinance your house with a mortgage and make a mortgage payment, so the other part of the credit report that the lender is going to look at is your debts that you carry on a monthly basis.

Comparing your income to your debt or your debt-to-income ratio. So let’s say you make thousand dollars a month and the liabilities that you carry are five hundred dollars a month you have 500, divide that by a thousand dollar-a-month income and you’re at 50 percent debt-to-income ratio that helps the lender understand where you are from a comfort level with your current liabilities. How’s that going to lookwith the new house payment how’s that going to compare? one quick tip in paying off derogatory credit like collections, tax liens, judgments,anything along those lines, you want to do everything that you can to keep a paper trail. Do what you can to get these the deletion letter because having something paid doesn’t necessarily fix your credit, having it deleted is going to make all the difference in the world.

When talking about the credit liabilities that you carry you like your credit card, your revolving debt, keep the balance is below 30 percent of what your available credit is. When you do that you are rewarded by the credit bureaus and they give you better scores based on the balance is that you carry in comparison to the size of credit that is available.