Overcoming Credit Problems
It happens to
many people, Obligations, Debts, Monthly bills. They all can
combine to get the best of you and as a result, a credit
problem arises. In the not too distant past, this often meant
having to wait 5 years, 10 years or more before attempting to
purchase a home, especially if there was a Bankruptcy or
a Foreclosure. Now, however, there are sources that can help
those who are overcoming credit problems and improving your bad credit and re-establish a solid credit
rating so you don't have to get a bad credit home loan.
Overcoming a Credit Problem
· Determine precisely what is
causing the delinquent credit problem. You will need to
have a clear picture of your current credit status so that you
know what to concentrate on. The quickest and easiest way to
accomplish this is to get a copy of your
Credit Report. You
may be able to due this through your
lender or directly with
the credit rating agencies.
· If you need credit repair, begin the process at once.
There are Credit Repair counselors
who will, for a fee that
is usually in the range of several hundred dollars, help you
with the process. Check out the video above for
information on a solid credit restoration company. Or, with the right information at your
disposal, you can handle the process yourself. A good consumer
option that may be able to help you is called
A similar option is to also check direct with one of the
credit reporting agencies such as
You should get your reports from all three credit reporting
agencies, Experian, Trans Union, and
Start by getting the credit problem under control now. Do not
incur any new debt. Do your best to begin to live within your
means. This will be an advantage now, when you are applying
for a loan, as well as later, when you will need to meet your
monthly mortgage obligation.
Credit Counseling programs that want you to enter into a
payment plan with them. Most of these companies
are supported by the lenders and are no better off than filing
a Chapter 13 Bankruptcy. This is
different than doing Credit Repair or dealing with a
Counselors. If you
have to go into credit counseling you will need to show that
you have met your obligation for at least 12 months before you
can apply for a FHA loan. If you are in credit
counseling then you need to have made your payments on time
for at least 12 months.
· Make a commitment to a program of savings. Even if you have
had a credit problem, there are options available for mortgages
for people with bad credit
if you have some down payment money available. Most lenders
have loan programs that vary from a few thousand dollars to 5%
down payments. There is little or no
hope if you have both credit problems and no cash.
on your needs in housing before your wants. Re-establishing
your financial footing is not as difficult as it used to be,
but it is impossible if you attempt to buy more house than
makes sense. Be conservative!
· Concentrate on those lenders who specialize in working with
those who have had credit problems and will make a bad credit
home loan. Spending time (and money)
applying to lenders who do not work with credit blemishes will
accomplish nothing. If you have a local source that you know
will consider such loans, take advantage of them.
you have credit problems, you may have better luck working
with a National Mortgage Banker verses a local Bank. The
National Mortgage Banker may
have more options available than your local Bank as they
typically have more sources and programs that will make a
bad credit home loan. Try to
get a recommendation from someone you trust rather than
just randomly picking someone.
is to look for a home where the seller will carry a second
mortgage for you. If you have 5% for you down payment,
then lender will only lend you a mortgage for 80% of the home
value, the seller can carry a second mortgage for 15% of the
purchase price. Be sure to discuss this option with you
Lender and Realtor. There are fewer home available were
the seller will be willing to do this.
Generally most past credit problems can be fixed in a
relatively short period of time. Since your lender is
motivated to help you purchase a home, ask them exactly what
you need to do to overcome any credit deficiencies so you
don't have to get a bad credit home loan. The time
and effort you spend to fix these items will pay big dividends
in the form of lower interest rates or less money needed to
purchase your home.