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Mortgage Co.
Credit Restoration
Credit can be a wonderful tool to manage your finances. But when unexpected financial burdens arise creditors can be very unforgiving. The result is a lowered credit score and the feeling that you may never get out from under your debts.
For those with damaged credit, the thought of being able to qualify for a home loan may seem impossible. However, many lenders understand that life has its unexpected turns and just because your credit may have taken a hit, you shouldn’t be forced to wait to get into a new loan.
While there are many options available to meet the needs of all credit profiles, the best course of action is to work to improve your credit. A big part of the restoration process can be a refinance of your current loan. Here are some other helpful tips:
Improving Your Credit Score:
Payment History
- Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score.
- If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
Amounts Owed
- Keep balances low on credit cards and other “revolving credit”. High outstanding debt can affect a score. Pay off debt rather than moving it around.
- Don't close unused credit cards as a short-term strategy to raise your score.
Length of Credit History
- If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
New Credit
- Do your rate shopping for a given loan within a focused period of time. Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
- Note that it's OK to request and check your own credit report. This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers. The three major agencies can be contacted at:
- Experian
P. O. Box 9595
Allen, TX 75013-9595
Ph: (888) 397-3742
- Equifax
P. O. Box 740241
Atlanta, GA 30374-0241
Ph: (800) 685-1111
- Trans Union
P. O. Box 1000
Chester, PA 19022
Ph: (800) 888-4213
Types of Credit Use
- Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
- Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by the score.
