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Home > Home Buying Tips > Solid Tips for Improving your Credit Before Buying a House

Solid Tips for Improving your Credit Before Buying a House


The crash of the housing market has affected everyone, including even those individuals who have good credit scores. The simple fact is that many lenders are far more wary about making mortgage loans. Even if you have good credit you could find it difficult to be approved for a mortgage. If your credit is bad, the situation is much more dismal.

The reality of the mortgage lending market is decidedly different than it was during the 1990s and into the 2000s when mortgage lenders were all too willing to make loans. Many resources for mortgages have now dried up. Back in the heyday of the real estate market most people thought the economy would continue growing, but as we all know now the housing market quickly collapse and numerous homeowners found themselves facing foreclosure and/or bankruptcy.

Far too many savings and loans, mortgage companies and banks made loans to applicants who had no real way of paying back the loans. At the same time, real estate values inflated to such a degree that it became unaffordable for many who were interested in buying a home and as a result many were able to purchase real estate with very little or even no money down in many instances and often with no employment verification and no or poor credit.

Today everyone is paying the consequences for those decisions. The pool of lending resources has dried up, making it hard even for people with good credit to find a mortgage loan. What can you do if you have bad credit and yet you still want to buy a home at some point in the future? The solution is unavoidable; you must clean up your credit.

First, you need to recognize that you cannot clean up your credit overnight. It is going to take some time and you need to exercise patience. This is why you need to look ahead and begin focusing on cleaning up your credit at least six months if not a year or more before you actually plan to buy a home. Begin by attempting to pay off as much of the bad credit as you can. In addition, you need to work on making a plan that is solid and reasonable and make sure you stick to it. Avoid setting goals that are unrealistic.

It is also a good idea to review your own credit report for any possible errors. You cannot erase your financial past and it could be that everything on your credit report is accurate, but if you do find an error you should take steps immediately to have it removed. You can engage a credit report repair services firm to fix your credit report. Contact the credit reporting bureau the error was filed with and provide written documentation of the error and ask for it to be removed. Follow up with the credit reporting bureau every thirty days until it is removed.

You should also make a point of getting into a matching funds saving plan at your place of employment if they offer one, such as a 401k or a 403b. Work on saving as much money as possible.

It is also a good idea to speak to both a loan officer and a realtor. Many mortgage companies and banks are reluctant to make loans today but it certainly does not hurt anything to talk to a loan officer. They can often provide you with solid advice regarding what you need to do in order to clear up derogatory credit you may have. That can help you to establish a plan that will improve your credit so you can be approved for a mortgage loan in the future.

Keep in mind that many mortgage companies and lenders as well as realtors are struggling with finances just the same as the average consumer. This is actually good news for you because it means they shouldn’t be so busy they cannot afford to spend some time talking to you. If you do find one who is reluctant to talk to you, rest assured there are plenty more who definitely need your business so you shouldn’t have a difficult time finding one who will be willing to speak with you.

Also, remember there is no need to be in a rush. It is not expected that property values are going to rise in the near future so you should have ample time to improve your credit and still take advantage of a good price on a home in the not so distant future.


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