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Garr Russell -Certified Credit Consultant's Blog

By Garr Russell | Other/Just Looking in Michigan

Credit Repair and Mortgages

For the things that matter credit matters. This couldn't be more true when talking about obtaining, maintaining or refinancing a home loan or mortgage. Did you know that the whole basis of a credit score is for lenders to determine to chance of you going 90 days late on a loan? A single late payment on your home loan can drop your credit scores up to 100 points! In this article I am going to talk about credit repair in regards to getting, maintaining or refinancing a mortgage.

As you will soon find out the first step to getting approved for a home loan depends on your credit reports and scores. The reason I say credit reports and scores is because you need both to meet certain criteria for your home loan to be approved. An FHA loan seems to be the most popular type of loan consumers are applying for currently. Most lenders are looking for a minimum credit score of 620-640 and for most non-medical collections to be paid. Credit repair is a vital tool in assisting consumers to prepare their credit reports for an approval of a loan.

Credit repair when refinancing a home loan

When refinancing a home loan credit repair is common. Many individuals are refinancing their home loans in efforts to free up money. With that being said those on tight budgets typically have collections, maxed out credit cards and a late payment here and there on their credit reports. As these negatives results in lower credit scores credit repair is a powerful tool. Consumers need to know what credit repair steps to take and common mistakes to avoid.

For instance not when settling collections its best to negotiate a deletion as part of the settlement or setup a payment arrangement where the creditor stops reporting negative marks and starts reporting your payments. When it Comes to credit cards it may be easier to get a credit limit increase or add another credit card then paying down a balance to increase your scores (be careful though as not to get your self further into debt). Good faith adjustments are another credit repair tool that is often utilized. Getting a creditor to remove a late payment can cause a huge credit score jump. This technique is called a "Good Faith Adjustment".

Credit repair when applying for a Mortgage

When applying for a mortgage credit repair is not only a great tool to ensure you get approved for a home loan, it's also a great way to make sure you are getting the best rate with the least amount of questions or concerns from a lender.

Before applying for a home loan all negative accounts should be properly validated with the credit bureaus as many can be deleted for being inaccurate, outdated, unverifiable or incomplete. It's also very important in credit repair to make sure you have the right amount of positive creditreporting to the credit bureaus. Last but not least you need to know how and when to settle debts as you may hurt your credit more than help.

As many will tell you obtaining good credit is easy. They say avoid credit repair by simply paying your bills on time. While that is the truth, credit repair is an important tool. As many know, the loss of a job, illness, divorce, stolen identity and several other of lives curve balls can not be avoided.

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