You’re in the market for a new home and want to apply for a home loan to get the dream house you’ve always wanted. But, you found out that you were turned down for the loan, or in some cases, the interest rate offered was too high. What can you do to fix this problem?
The problem is that since your credit score is low, the lender is worried about your ability to pay the loan back. You can raise your score before applying for the loan if you act fast. Work on raising your score before you go apply for a loan. Even if you work fast, cleaning your credit takes time.
It’s better to work on raising the scores first and then going to apply for a loan. The better your scores are, the more chance you’ll have to get a loan at a better interest rate. Obtain copies of all three of your credit reports.
Check them closely for possible mistakes. If something appears wrong, dispute it immediately. If the negative items are rightfully yours, then commit to pay those debts off, even gradually. Pay as much as possible on a regular basis to show that you’re trying hard to repay your debt. If the creditors see that you’re trying, they’ll be more willing to report it to the bureaus, which would affect your credit scores positively.
Some people attempt to have a correct item removed from their credit report. If the credit reporting agencies can’t verify the information within a certain time frame, they’re required to delete that item from their reports. While it is not illegal to do so, it is definitely not recommended. Even if the item gets temporarily removed, it will probably reappear as soon as the information is verified.
Make sure you keep all of your accounts and bills up to date and current. Late payments affect your score as well. The more positive items that are reported, the better it will look to potential lenders. Some things are harder than others to remove, but don’t let that fact discourage you. Feel free to ask the credit reporting companies to run an investigation since it is, sometimes, helpful.
If another investigation doesn’t help, you can only focus on adding as many positive items as possible. Once you’ve done what you can with the reports, start checking around for lenders to apply to for a home loan.
