SELF IMPROVEMENT

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At one time you could get a mortgage with bad credit and a small down payment, or even no down payment. Many of these loans were possible even if you couldn't document sufficient income.

Now the mortgage market has tightened in many ways. Lenders are requiring a higher credit score, verified income, and require a good down payment unless you have strong credit.

Today the ideal situation for getting a mortgage is to have a credit score of 640 or better and sufficient income for the property you want to buy. This will usually be good for a zero down loan with a very low finance rate.

If your credit score is low there may still be options for financing. A good mortgage broker can review your options with you. There are still programs available for consumers with less than perfect credit.

If you can't qualify for a home loan, or if you only qualify for a high rate loan, you can work on improving your credit score. The first step is to get a copy of all three credit bureaus. You can get these from www.annualcreditreport.com. You will have to pay a small extra fee to get your credit scores with the reports.

To improve your score it is important to be current on all your payments. If you are behind now it is probably not the right time to apply for a new loan. This would be a budget issue.

Next check the credit reports carefully and request corrections for any errors from the credit reporting companies. You can also challenge any negative information with the bureaus. Information on how to do these things will be included with the report from the bureaus.

If you don't have several recent good items in your credit file there are some options even with credit problems. You can get a secured credit card by making a deposit with the card issuer. Some furniture rental companies will report your payments to the credit bureaus. You may be able to get a small loan from your bank or credit union by having some money on deposit there as security.

For any revolving credit (credit cards) you should try to bring the balance to no more than 30% of the account limit. Your score will suffer if your accounts are "maxed out".

If you have collection or charge-off accounts listed on your credit reports you should try to get these deleted if possible. You can call the company that listed the information and ask if they will delete the listing if you pay them. If they agree, ask them to put that in writing before you make payment. If they say that they won't delete the item, but would change the listing to "paid collection", you may not get much score improvement. I might not be in any hurry to pay a collection company if they were still going to list damaging information on my report.

If you have a bankruptcy or foreclosure financing will become easier two or three years after these events. Judgments or liens can be a big problem for getting a mortgage so take care of these if possible.

In many cases a little effort can give your credit score a boost. Some mortgage brokers will be willing to help you create a specific plan to improve your credit score to help you qualify for a mortgage. Texas residents can visit my Houston mortgage credit repair site for more information. Or call my office at 281-537-7800.