When purchasing a home, it is important you have a good home purchase credit rating.
Home lenders have some factors that are put into consideration before you can qualify for a home purchase loan.
Factors considered are Income, Debt-to-Income-ratio and your credit rating.
By now you know your credit rating determines the risk the lender is willing to take when borrowing money from a consumer.
The most essential to them is your FICO Score, which is usually attached to your credit report by the three credit bureaus.
(Equifax, Experian and Transunion).
Of your three scores the middle one is most important.
Your middle score determines if you would be given the loan and what the terms of the loan will be.
When working on your credit report to qualify you for a home purchase loan, you should act quickly to erase all errors on your account.
You have to act quickly to delete these negative items because the banks might capitalize on it, thereby reducing your score, increasing your interest rate on the loan, and even your chances of getting the loan.
Some banks will even tell you to settle such an account before they can approve your loan.
For collection and charge off account, some lenders will ask that you pay these accounts in full before you start residing in your home.
If such accounts are on your credit report for more than 7 years old, you will have to send dispute letters to each of the 3 bureaus to have them deleted from your report before applying for a home purchase loan.
If these accounts are just few years old, you will be left with no choice but to settle them.
Then you inform the collection agency that you are ready to settle such debt as long as they will delete it form your report.
Some collection agencies will grant your proposal while other will write to you that the account had been settled.
When such happens, you send a copy of such document to your contact in the lender.
Fair credit reporting act states that collections and charge off should be deleted after 7 years from the closure date of the account.
You are therefore advised to check and monitor your credit report at least 6 months before you apply for a home purchase loan.
This gives you plenty of time to work towards a good credit rating.
Home lenders have some factors that are put into consideration before you can qualify for a home purchase loan.
Factors considered are Income, Debt-to-Income-ratio and your credit rating.
By now you know your credit rating determines the risk the lender is willing to take when borrowing money from a consumer.
The most essential to them is your FICO Score, which is usually attached to your credit report by the three credit bureaus.
(Equifax, Experian and Transunion).
Of your three scores the middle one is most important.
Your middle score determines if you would be given the loan and what the terms of the loan will be.
When working on your credit report to qualify you for a home purchase loan, you should act quickly to erase all errors on your account.
You have to act quickly to delete these negative items because the banks might capitalize on it, thereby reducing your score, increasing your interest rate on the loan, and even your chances of getting the loan.
Some banks will even tell you to settle such an account before they can approve your loan.
For collection and charge off account, some lenders will ask that you pay these accounts in full before you start residing in your home.
If such accounts are on your credit report for more than 7 years old, you will have to send dispute letters to each of the 3 bureaus to have them deleted from your report before applying for a home purchase loan.
If these accounts are just few years old, you will be left with no choice but to settle them.
Then you inform the collection agency that you are ready to settle such debt as long as they will delete it form your report.
Some collection agencies will grant your proposal while other will write to you that the account had been settled.
When such happens, you send a copy of such document to your contact in the lender.
Fair credit reporting act states that collections and charge off should be deleted after 7 years from the closure date of the account.
You are therefore advised to check and monitor your credit report at least 6 months before you apply for a home purchase loan.
This gives you plenty of time to work towards a good credit rating.
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