Most people at some point or the other would invest in a home. If you are not buying a house with cash down payment you will need home loans help to cover the cost of your home. Then your credit history will certainly come into picture. Credit history is a report that shows how an individual has been managing his/her credit. This usually starts on or near the date that a person opens his/her first credit card, loan, or other credit account. The longer you maintain accounts in good standing, the better your score will be. This shows the lender that you are able to make a long-term commitment to home loans help extended by lenders and are consistently responsible about making your payments.

In light of the housing market crash and the outrage about the foreclosure crisis, and the fact that it was partly fueled by the bad credit, it has become ever important for mortgage companies, banks and credit card companies to provide credit to those who are considered a good risk. Your FICO score is said to mirror and reflect if you are a worthy risk to the lender and credit history accounts for 15% of your score which influences the rate at which you will be approved a home loan, if at all approved. So how can you improve your credit history if at all you have any collections in your past credit history and do you stand a chance at all to get a home loan?

Before you apply for a home loan you are advised to check your credit report to see where you stand. By checking your credit score you can look for certain errors in the credit report. It is quite possible you might have paid your dues but they are not recorded in the credit report. You can inform your credit agencies to do the necessary corrections. Once changes have been made, your credit score will be updated. You may be able to qualify for a home loan then by reapplying for a mortgage loan. You may also want to consider some sort of debt consolidation loans with bad credit as well.

Actually, fixing your credit report is one of the best ways to buy a home with poor credit. It’s cheap, easy, and can be pretty effective. Focusing on improving your credit score can make a difference for your future debts, as high debt-to-credit-limit ratios drive your scores down. You may not want to close your unused accounts because zero balance might help your score and at the same time do not open new accounts that you don’t need as it alters the debt to credit limit. Further, maintain a good mix of credit card and installments loans, loans with fixed payments can help to increase your score if you manage your credit card responsively. These measures will not only create a positive history but also improve your chances of getting good interest rate.

Using a home loan calc will also help you to see what kind of monthly payments you can expect to pay once you have purchased the home and allow you to be in your price bracket. You can carefully assess all these options and review your concerns with financial experts to work out a plan to create a positive credit history and also get a home loan approved with a good interest rate.

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Category: Finances
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