Repairing and Restoring Your Credit to Get a Mortgage Loan

By Tony Banks



Getting a new home doesn't need to be as difficult as it used to, all you need to understand is what makes you eligible for a mortgage loan.

Home mortgage lenders take into consideration your Credit rating, Debt to income ratio, your income, and most importantly your FICO score which is attached to your credit reports: Equifax, Experian and Transunion. It is important to pay close attention to all negative or delinquent scores, this is because the middle score of all three scores generated (FICO score), would be used by lenders to determine your eligibility for a loan.

Delinquent and negative accounts are not welcome by Lenders or Banks. Aside from your score being dramatically lowered due to such accounts, you may be required to pay a Bank loan at higher interest rates. In some cases, settling such an account is a prerequisite for obtaining a loan.

This is not restricted to negative accounts alone, some lenders would require you to pay off collection and charge accounts before you can settle on your home. If the previously mentioned accounts are present in your report and have existed for more than seven years, it would be wise to have them deleted from your credit report before applying for a mortgage loan. This can be done by sending dispute letters to the different credit bureaus instructing them to delete the records from your credit report.

On the other hand, if these accounts are just a few months to a few years old you would want to delete it from your credit report by settling the debt. Simply notify the collection agency about your intention, as some collection agencies would grant you this request, others may only send you a written document stating that the account has been settled. In such a situation, do forward the document to your contact at the mortgage company.

Resolutions to possible issues that may rise during your mortgage application process have already been provided for in the "Fair Credit Reporting Act" which states; collections and charge offs should be deleted after seven years from the date the account was closed.

So start monitoring your credit report and scores at LEAST six months before your actual mortgage loan application is made, this would provide you with adequate time to resolve any discrepancy.

Visit self credit repair to learn how to raise your credit score by 50 or more points to get approved for cars, and home loans on credit!

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