Credit Repair

If you're interested in obtaining the best possible interest rate for your mortgage, one of the most important qualifications will be your current credit rating.

While maintaining good credit is one of the most important considerations in qualifying for the best mortgage rates, the reality is many hard-working, responsible people experience some financial setbacks during their lifetime which has a negative impact on their credit.

The great thing is that your credit rating CAN be fixed, however it takes time and financial discipline to do so.

Below is a list of 7 ways you can begin to repair your credit, so that you can take advantage of the best mortgage options offered on the market today.

1. Understand where credit comes from. If you are going to improve your credit score, then logic has it that you must understand what your credit score is and how it works. Without this information, you won't be very effective at improving your score because you won't understand how things that you do in your daily life affect your score.
   
   
2. Pay your bills on time. One of the best ways to improve your credit score is simply to pay your bills on time. This is absurdly simple but it works very well. Nothing shows lenders what you take debts seriously as much as a history of paying promptly. Experts think that up to 35% of your credit score is based on paying your bills on time, so this simple step is one of the easiest ways to boost your credit score.
   
   
3. Avoid excessive credit. If you have many lines of credit or several huge debts, you make a worse credit risk because you are close to "over extending" your credit. This simply means that you may be taking on more credit that you can comfortably pay off. Even if you are making payments reguarly on existing bills, lenders know that you will have a harder time paying off your bills if your debt load grows too high.
   
   The higher your debts the greater you're monthly debts payments and so the higher the risk that you will eventually be unable to repay your debts. In order to have a great credit score, avoid taking out extensive credit. You should stick to one or two other major debts (car loan, mortgage) in order to have the best credit rating.
   
   
4. Pay down your debts. If you have a lot of debt, your credit score will suffer. Paying down your debts to a minimum will help elevate your credit score. If you are serious about improving your credit score, then start with the largest debt you have and start paying it down so that you are using a smaller percentage of your total credit.
   
   In general, try to make sure that you use no more than 50% of your credit. If possible, reduce the debt even more. If you pay off your credit card in full each month, that is even better. Allowing a credit card to remain at or near the credit limit, even though you pay your monthly payment on time, will negatively affect your credit score and will compound the negative effect on your score with time.
   
   
5. Have a range of credit types. The types of credit you have factor in calculating your credit score. In general, lenders like to see that you are able to handle a range of credit types as well. Having some form of personal credit such as credit cards and some larger types of credit such as a mortgage or auto loan and paying them off regularly is better than having one type of credit.
   
   
6. Beware of debts and credit you don't use. Having credit lines and credit cards you do not need makes you seem like a worse credit risk because you run the risk of "over extending" your credit. Also, having lots of accounts your don't use increases the odds that you will forget about an old account and stop making payments on it, resulting in a lower credit score. Having fewer accounts will make it easier for you to keep track of your debts and will increae the chances of you having a good credit score.
   
   
7. Check your credit score regularly. You are more likely to notice problems and inconsistencies if you check your credit score on a regular basis -- at least once a year, and preferably three times a year. Be sure to check your credit rating with each credit bureau too. If you notice anything odd or anything you don't recognize (such as a large account you didn't open) report it immediately.
   
   Sometimes, these errors are caused by mistakes made at the credit bureau, but they could be an indication that someone is using your identity. In either case, such mistakes could hurt your credit score. Fixing such errors improves your credit score.

Contact Tom today for more information and advice on improving your credit rating to qualify for a better mortgage.