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Improving Your Credit

Before you apply for a sub prime loan, make sure that your credit is as good as it can be. Check your credit report to be sure it is accurate. You can also include a letter explaining the situation of your foreclosure, which may sway the lender’s opinion of you application.

Time will also improve your credit score. Credit scores range from A to E, with several divisions in between. A year after a foreclosure, you can get in the 500 range with your credit score and cut your rates by two points or more. Two years can see you with 600+ credit score and near prime rates.

Ways to Quickly Improve Credit Score

After a foreclosure, rebuilding credit is a top concern. Obtaining a mortgage loan and maintaining consistent payments will significantly improve your score within a year. Even if you cannot negotiate a low interest rate immediately following a foreclosure, by consistently making on-time payments and proving your credit worthiness, you have the option of refinancing in a couple of years for a low rate mortgage.

If you are hoping to obtain an initial low rate mortgage, make an effort to improve your credit rating before applying for a home loan. Applying for new credit accounts is a fast way to raise your credit score. If possible, obtain a secured/unsecured credit card, department store card, etc. For the next 12 months, make regular timely payments. Paying off the balance each month proves you can handle credit responsibly. When re-establishing credit, periodically check your credit score and report for inaccuracies.

If you really do want to get into a home, don’t let bad credit stop you. There are lenders out there who can help you, it just takes some persistence. Apply with multiple lenders. Like I said, apply with mortgage services that specialize in bad credit mortgage loans and will submit your application to multiple lenders with only having one credit inquiry.

By Carrie Reeder