August 6, 2024
Resolving outstanding debts and making timely payments can gradually boost your credit score.
The Consumer Financial Protection Bureau recommends creating a budget and prioritizing debt repayment to regain financial stability. It’s also vital to monitor your credit reports aggressively at least 12 months before applying for a home loan.
Knowing your rights when dealing with credit repair companies is essential. The Credit Repair Organizations Act (CROA) ensures transparency in credit repair services and prohibits deceptive practices.
When it comes to home loans and your credit, lenders consider your FICO scores and review your payment history and overall credit record.
It’s important to understand that FICO scores don’t necessarily reflect your entire credit story. To have a successful home loan application, maintain good payment habits for 12 months and avoid missed payments.
While some borrowers with lower FICO scores may still qualify for home loans, they should be prepared for a larger down payment.
Before selecting a loan, carefully compare options and consider your long-term financial goals. For some consumers, adjustable-rate mortgages (ARM) are better when high rates are expected to remain unchanged for an extended period.
Always thoroughly read and understand all loan documents, including the loan terms, such as interest rates, fees, and repayment schedules. It’s crucial not to sign any paperwork that you don’t fully comprehend.
There are three major credit bureaus in the United States. Contact them for a free copy of your credit report and check if you qualify for any free credit monitoring services due to data breaches or hacking attempts on major companies in the last year.
The three major credit agencies are:
- Equifax
- Experian
- TransUnion
For best results, the current advice is to check all three reports each time you review your credit. This will help you identify any errors or discrepancies and allow you to take steps to correct them.
Keep your credit card balances low. Aim to use less than 30% of your available credit. Check your credit reports to see if your current credit use and balances are reported accurately.
It takes time to build good credit. Don’t get discouraged if you don’t see results as soon as you’d like.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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