Home Loans – Repair Your Credit Before You Buy

Charles Essmeier

Before you take out a home loan or make any major purchase, you should be aware that any prospective lender will want to take a look at your credit report. Your credit report is a record of all of your past financial dealings, and any loans, credit cards, judgements, bankruptcies or other major financial transactions are listed there. Along with your credit report will come your credit score, which is a three digit number between 300 and 850 that represents a distillation of all of the above. That score represents your entire financial life, and your ability to obtain financing for any major purchase depends on having a good one. What if you don’t have a good record? Should you go to one of those companies that promise to repair your credit? What you should do is repair it yourself.

The idea of credit repair is a myth. There is no magic solution to fixing problem credit, and any company that promises to do so is only interested in your cash. Your credit report and score are maintained by three separate credit bureaus that keep pretty accurate accounts of all financial dealings done under your Social Security number. There is no way to quickly “fix” a faulty credit report. You can, however, fix it yourself and fix it for free. It just takes time.

The way to repair your credit record is to start paying your bills on time and paying off your debt. More than one third of your credit score is determined by your past ability to pay bills and to pay them on time. Start doing so now. It may take a year or two, but steadily paying your bills without making any late payments goes a long way towards repairing a credit score. Another third of your score is determined by your ratio of debt to available credit. If your credit cards are maxed out, you need to pay off or pay down your balances. It’s tough to obtain a loan when you are already in debt to the gills.

Stop using your credit cards, if possible. Don’t cancel them; just stop using them, particularly if you have a balance to pay off. You want to reduce your debt. Pay cash when you can. And check your credit report for problems. You can obtain a copy for free from the free credit report Website.

Repairing your credit record takes time and discipline. There is no quick solution other than paying your bills, paying them on time, and waiting for the damage to heal. After that, you should be in good shape to obtain your home or car of your dreams.


About the Author: ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.

Source: www.isnare.com

Dealing With and Repairing Bad Credit

John Mussi

Bad credit can be a burden for otherwise good credit. It may not seem fair at times that financial mistakes in the past can haunt you in the present, but with a little bit of work and some time bad credit can be turned around and repaired.

The important thing to remember is that options exist even for people with bad credit… and that just because it's bad now doesn't mean that it always will be.

What is credit, anyway?

Credit, also known as a credit rating, is an indication to potential lenders and service providers as to how likely a person is to repay the loan or credit line that they're offered, or how likely they are to pay their bills on time.

If you have good credit then you have a high credit rating, and have paid your bills on time most of the time in the past.

If you have bad credit then you have a low credit rating, and have had problems paying your bills on time or haven't paid some of them at all.

People with bad credit are considered a risk for new credit lines because of their past performance, and are usually either denied credit or services with new providers or have to pay security deposits and higher interest rates than those people with good credit.

What options exist for people who have less-than-perfect credit?

If you have bad credit then it might seem like you can't get anyone to take the risk to extend you a loan or credit line, at least at first glance.

In reality, though, there is an entire industry of bad credit lenders, from credit card companies to cheque advance lenders… even automotive financing and car title loans.

Many of these lenders do require security deposits or higher interest rates, but in exchange they offer services that you might otherwise be unable to get.

Some of these lenders don't even check your credit… though it's very likely that their patrons either have bad or no credit, they offer the same terms and rates to everyone without checking.

How can you repair your credit rating?

Every day it seems like there are more companies offering amazing credit repair services, but many of them either don't work like they claim that they do, cost you more than they're worth, or are of questionable legality.

The desperation to get rid of bad credit can open you up to some scams that are mixed in with the legitimate services, so take care when dealing with any of these companies.

A far better option is to take care managing your finances and repair your credit on your own… it may take longer, but it usually ends up being cheaper in the long run.

Take care to pay your bills on time, and make payment arrangements to clear old debts. At the same time, you should establish one or two lines of credit with low credit limits (to keep them from getting out of control). Make regular on-time payments to these credit lines, letting the providers report the payments on your credit report.

As time goes by and you pay off old debts, these positive reports will overshadow the old negative ones, and the older ones will eventually be removed from your report altogether.

--

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.