Getting a mortgage with less than perfect credit can be tricky, but it’s not impossible. If you’re struggling to get a loan for a home purchase in Wooster, Ohio, there are some steps you can take to begin the process on the right foot.
What is a low credit score?
First, let’s address what low credit actually means. If you’ve never had any credit before, your score will be low by default. If you have had credit and have missed payments or had debts outstanding, your score will reflect that. Either way, having a low credit score doesn’t mean that you can’t become a homeowner! There are plenty of options available to you—you just need to know where to start.
How can I repair my credit score?
Repairing your credit score can be tricky, and it might take some time before it begins to improve if you’re starting with significant debt or other negative marks on your report. The first step is pulling your credit reports to check for accuracy. Then, begin paying down any debts that you currently have as quickly as possible without missing or defaulting on other payments. Finally, apply the 20-10 Rule. Follow this step-by-step guide to get ahead.
1. Know your credit score
Get all your credit reports. You are entitled to one free report a year from each of the three major credit reporting bureaus, Equifax, Experian, and TransUnion. You can also get them at AnnualCreditReport.com. Look at your reports to see if there are any mistakes that can be corrected.
2. Work with creditors
Write a letter to the creditors and collection agencies disputing the debt, requesting a payment plan or settlement deal, or offering them a lump sum for the full amount owed. Send each one via certified mail, return receipt requested so that you have proof that they received it. If you receive no response, send another letter in 30 days and again in 60 days. Keep track of all letters and their responses.
3. Create a budget
Update your household budget. Create a budget using your monthly income and expenses then add in any debts you need to pay off over the next 12 months (credit cards, car loans, etc.). You can use a free budget calculator.
4. Settle one debt at a time
Focus on paying off one card/loan at a time. Put as much money as possible toward paying off one balance while making minimum payments on your other debts. Once the first balance is paid off, put as much money as possible toward the next card/loan until it is paid off, then move on to the next.
Knowing your credit score makes it easy to understand where you stand with lenders. That’s why it’s so important to monitor your credit, especially before going into a loan application. The better your score, the better your chances will be of getting a mortgage—and the more affordable mortgage options you’ll have available.
If you’re ready to take the next step in your home buying journey in Wooster, Ohio and you have less than perfect credit, contact us today.
PRMI – Wooster has been helping clients purchase homes since 1998 and is backed by one of the most established mortgage lenders in the county with a nationwide presence. We offer a variety of loan programs for the greater Wooster, Ohio area – including Canton and Medina, Ohio. Are you looking for a trusted lender? Contact us by phone at 866.888.7902 or email Matt Shanlian at firstname.lastname@example.org.
*Opinions expressed are solely my own and do not express the views of my employer.