How a Low Credit Score Affects Your Purchase of a Home
Have you ever considered what a lender thinks when he or she reviews a credit report in relation to approving or denying a mortgage application? Well, the most common answers would be: What is their credit score? How is their credit history? What is their income? What is their debt to income ratio? Will they be providing a substantial down payment?
The negative effects of a less than stellar credit history may be minimized by a large down payment; however, you will still likely pay more in fees and end up with a high mortgage interest rate. The fact is that in the past 12-18 months the minimum score necessary to buy a home has increased.
You cannot hide from a low credit score. In order to purchase a home, it is necessary to have a good credit history, whether you can provide a large down payment or not. A prospective homeowner should attempt to obtain an average credit score of 758 in order to receive the lowest interest rates, according to CNN.com.
Find Out How to Raise Your Credit Score and Improve Your Chances of Purchasing a Home
It is helpful and easy to request a copy of your credit report and read it over for negative entries. Mistakes and errors are often found on credit reports and this information can be disputed.
A dispute letter to the relevant credit bureaus would be a good start. Alternatively, to resolve the negative entry, you will need to contact the creditor directly.
Sometimes a cleverly crafted dispute letter will result in the removal of the negative entry. However, it is often the case that investigative procedures are careless and result in errors.
The reason for this is, when investigating any dispute, credit bureaus must necessarily spend additional resources and time to resolve the matter. Unfortunately, some credit bureaus feel it is more cost effective to take their time or ignore the matter altogether. It is their desire that you give up on your request to remove negative entries from your credit report.
Will it Take Long to Boost My Credit Score?
Often people want to know how long it will take to see an improvment in their credit score. This answer, of course, is dependent upon the individual situation, however, in many cases, an improvement may be seen by 6-12 months.
Although this may seem like an extremely long time, it is exceedingly shorter than waiting 7-10 years for the negative information to be erased. If you plan to purchase a home, it is imperative that you wait the 6-12 months to clear your credit report of any negative information.
Discover how I raised my credit score from 582 to 745 in four months with the help of Lexington Law. Learn the truth about quickly and effectively deleting bad credit at www.creditforcouples.com.
Posted under Credit
This post was written by Casey Deanwater on December 31, 2009
