Credit Repair for Homebuyers - what you need to know before you apply for a mortgage

When you are ready to buy a home, the first place you should turn your attention is not the local MLS listings. You need to pay attention to your credit report. Your credit score is one of the biggest determining factors in whether or not you’ll be able to afford a home. If you have had credit problems in the past or you just aren’t sure what your credit score is, it’s a good idea to go over your credit report with a fine tooth come.

Fixing your credit can happen in a variety of different ways. One of the places that people often look to first is correcting mistakes that are on your credit report. As hard as it is to believe, it does happen. Most credit reports have some form of mistake on them, whether it’s an old address or a debt that has been paid but is still showing up on the report.

First, you need to get copies of your credit report from all three credit reporting agencies: Equifax, Experian and TransUnion. These agencies all keep different records and may have different information about your credit report. Take notes on any errors that need to be corrected. Send in an error report to the credit agencies and explain what the mistake was. You can ask for rectification and re-sending your credit report to the banks who are considering you for a mortgage. You may sometimes have to follow up consistently with these agencies in order to make sure that the changes get made.

Another important part of repairing your credit is having better financial habits which will improve your credit score over time. When you pay your bills late, it shows up on your credit report. You should take efforts to make sure that all of your payments are sent in on time whether they are for loans, credit cards or other bills. Over time your positive payment history will improve your credit score and fix any problems you’ve had in the past. Because it takes time for this to have a positive impact on your credit, you need to begin several months or even up to a year before you decide you want to buy a home.

You can also improve your credit score by paying down your credit card balances. One of the first things a mortgage broker looks at is your debt to credit limit ratio. If all of your credit cards are maxed out, you may have trouble getting a good mortgage rate even if your credit score is relatively good.

Credit repair may seem daunting, but it doesn’t have to be. As long as you make a plan to pay attention to your credit and get it moving in a positive direction, you can ensure that you’ll get a better mortgage rate. It all starts with getting your credit reports and seeing what is there. After that you can formulate a plan and put yourself in a better credit situation.

About the Author:
Joe Cline writes articles for Austin Texas Realtor. Other articles written by the author related to Cedar Park real estate and Austin real estate can be found on the net.