Thursday’s Thoughts – Can your credit really be fixed?

Let’s face it.  With today’s economy and job statistics, more and more people are falling into financial hardship.  We pull credit for potential home buyers every day and without a doubt we are seeing credit scores, on average, dropping for all types of borrowers.  Is there hope for you if your credit score has seen it’s better days?  We think so.  Can your credit score be fixed?  Absolutely!

Since we first started in the mortgage industry we’ve tried to be as helpful as possible to everyone.  We can’t approve everyone because of the constricting industry guidelines but we can point them in the right direction on rebuilding their credit if they don’t qualify. 

There are some thing you can easily do yourself to increase your credit score if it’s too low.  65% of your credit score comes from your payment history and amounts owed on your current reported debts.  The other 35% comes from new credit, types of credit and length of credit history.  Obviously making payments on time is the easiest thing you can do to have a positive impact on your score.  If you continually make payments 30 days late, then your credit score is not going to get any better.

Apply for some new credit, preferably some revolving credit such as gas or grocery credit cards.  You can qualify for these easier and they’re something that can come in handy with normal things you would buy anyways.  Making payments on these new accounts on a timely manner can help raise your score.  Avoid paying off your current debts if you are able to continue to making  ontime payments instead.  This will help by adding positive information on credit report each month.

The Fair Credit Reporting Act gives you the right to dispute or request investigations on any items on your credit report.  If you currently have collections or late payments, you can actually request the credit bureaus to investigate these accounts.  They will in turn request proof from the creditor and if it’s not presented to them in 30 days, they will remove these items from your report.  This can make a huge difference in your credit score if your report is full of negative trade lines.  You can do this yourself with a little research or you can hire a credit repair company to file these investigations for you.  Be sure to do some research on the credit repair company you pick before you enter into an agreement because some are a lot better than others.

So you don’t qualify for a mortgage today.  It’s not the end of the world.  Take a few steps in the right direction.  Have a litte patience.  Do your homework and eventually your score will increase and you could be on your way to homeownership!  For more information on this topic, check out our videos on credit reports and credit scores.