Information for the Credit – Challenged Simple Credit Secrets You Can Use To Improve Your Chances of Getting The Mortgage You Want

Jun 18, 2015

Information for the Credit - Challenged Simple Credit Secrets You Can Use To Improve Your Chances of Getting The Mortgage You WantThe most important step in getting approved for a loan with bad credit is to improve your credit score.
If you had a bankruptcy, once your bankruptcy has been discharged, you can apply for a secured credit card. Do a little searching online and you’ll find companies that will give you a secured credit card.
Capital One is well-known for being the credit card people get after a bankruptcy.
You also need to start re-establishing good credit as soon as possible. Mortgage brokers have access to institutions that work with people with bad credit. Sometimes they require a larger down payment. You may be asked to pay a larger down payment, as opposed to the standard 5%.
Another idea is to open a savings account and add regular deposits (you can have them automatically withdrawn from your checking account). Then when you save $1,000 or so, you can go to your bank and get your secured credit card.
When you put funds into your savings account, it proves to a lender that you can manage your money. Even if you save $1,000 and you only get a $500 credit card because you declared bankruptcy, you’re still re-establishing your credit.
Once you’ve been discharged and you have two years re-established credit, most lenders will work with you. But if you do nothing to re-establish your credit, your score will stay low.
How to Raise Your Credit Score with Minimal Effort
Your credit report is a working document that you can change over time to increase your credit score.
People often make the mistake of running their credit cards or their lines of credit to the maximum amount allowed. If your credit limits are 80% used (i.e., your balance is 80% or higher of your credit limit available), then your score is negatively affected.
The optimum amount for your credit score is to keep your balances at 30% of the limit available.
Once your balance surpasses that 30%, you jump into a different category. If you get to 80% or higher, then you fall into another category that lowers your score even more.
Obviously, you can’t raise your credit score if you’re late on payments. But that doesn’t mean you should avoid using your credit cards so you don’t have to worry about building a balance.
In fact, you should have at least two or three active trades each month. Too often people pay off their credit cards and then believe it’s best to begin using cash for all transactions. The problem with this strategy is lenders want to see active trades.
Once your credit cards are paid off, try a simple transaction such as filling up your car with gas or buying groceries. Then pay off that balance at the end of the month so you keep your credit card or line of credit current.
Also, in a case where you might have four credit cards and you want to go down to two, don’t close out the ones you don’t use. You’re better off letting them stand dormant than closing them. Just be sure you use your other two cards periodically to keep them active.
The bottom line is lenders won’t loan to people who haven’t proved they can handle credit. The minimum amount of credit between your trades should be $2,000 – $5,000. This may require having a couple of credit cards and/or a loan.
As mentioned earlier, you don’t have to go out and spend the entire amount. Buy gas … buy groceries … do something … then pay off the balance. The key is keeping your accounts active.
To find out what you can get preapproved for call GLM Mortgage Group. We always return our calls within 90 minutes.

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