Building Credit for Mortgage Qualification

With the amount of debt coming from credit cards and other lines of credit in America today, it is no wonder that many people find themselves in over their heads and having difficulty finding a mortgage. Most find it too depressing to even think about their debt load, let alone plan to do anything about it. However, the dream of owning your own home doesn't have to be a discouraging one: there are many things you can start doing right away to bring you closer to living in house that is all yours. Why rent when you can own? Renting = paying someone else's mortgage. Owing = paying your own mortgage, which is the equivalent of writing yourself a check every month.

Find Out What is Causing the Problems:

Don't be afraid of finding out how bad it is. You won't be able to fix the problem if you don't know what the problem is. You can easily order your credit score and history online for free or a small fee. Print it out, and study it carefully. It will tell you about your past and present credit history, including late payments, delinquent accounts, outstanding debts and current loans, as well as how many times people have checked your credit history. The information you find in that report can go a long way to helping you fix things so you can get a mortgage. This is what companies see when they perform a credit check. Sometimes when people take a look at their credit report they notice certain information that is not 100% correct, and these mistakes can be all that is affecting your credit. These could include a paid account that was not marked as paid, an account that was never yours or wrong late payment information.

How to Fix the Problems:

Finding approval for your mortgage application can come sooner than you think. In some cases it may take up to 7 years to improve your credit enough to qualify for a mortgage but in many situations, all it takes is a year or two, or even a few months. Here are some things you can start doing right away to improve your credit rating.

  1. Fix the mistakes. If you do notice errors on your credit report, first call the credit union that generated the report and let them know about the mistake. Then call or write a letter to the company that you had the account with. After they tell you it is resolved, call the credit company again and make sure that it was rectified.

  2. Pay off all delinquent accounts. I will let you in on a little secret here: Depending on how long the account has been around, the company will most likely let you off with paying off 50% or less of the original amount owing! It costs them extra money to have your account in arrears, and they want to be done with it as much as you do. Just call them up and ask if you can arrange to make a deal. Be prepared to pay it off within a few days though.

  3. DON'T GET INTO ANY MORE DEBT! If you have to let someone else open your mail and do away with the credit card companies offers before you can be tempted by them, so be it. Do whatever it takes to repair your credit - it will be worth it when you move into your new home!