‘This is the best time to buy.’
‘Take advantage now that interest rates have fallen.’
‘Hurry up! The prices are rising.’
Do these phrases sound familiar to you? You are probably tired of listening to them and you agree with what they say, but you still cannot buy your property. One reason is that there are still many who see the effects of the recession, and drag problems in their credit that prevent them from buying. On the other hand, there are the young graduates in recent years, who have not been able to build their credit history because they are unemployed. These are some of the situations with the credit that do not allow to buy house, so here we give you recommendations to solve them;
Bankruptcy and Foreclosures
These are extreme situations. If you went through this, you will have to spend a ‘waiting time’ to buy back and demonstrate economic stability and good payment history if you have acquired new obligations.
It is a term that generally applies to any situation where the credit does not reach the appropriate score to be considered good or excellent. Keep in mind that any delay in your payments affects the credit. Depending on the severity of these arrears and the frequency of them, your credit score will decrease. You have to have your accounts up to date and pay well for a while before applying for a home loan.
They can reflect between 7 and 10 years on your credit report. If they were real, they will greatly affect you, and in many cases, you will be asked to pay them before you approve a loan. Focus on what you will have to pay if that is the case.
They are more frequent than you think. That is why it is good to request a credit report at least once a year. If there are accounts that do not belong to you, arrears that are not real or any other incorrect information, write to one of the main credit companies to refute the report.
No Credit History
To some people, it may seem strange, but it is real. If you have no evidence that you have had or have debts and pay them on time, they will not approve a home loan. The reason is simple, the borrower or bank wants signs that you are responsible with your payments. Your history with them allows you to make a projection of how your behavior will be with the payment of your house. The recommendation to young people is to get at least one credit card, even if it is small, use it and pay responsibly. This is one way to start building your credit history.
Over time the amount available to spend will increase and you will continue to receive offers from other cards. Be careful, you should not get into debt at all. Paying on time and having a good job will be the keys to approval of your home loan.
The bank, where you apply or a financial specialist, will be able to clarify the panorama on your credit and help you establish an action plan to qualify for a mortgage loan in future.
If you have had credit problems in the past and you show that the situation that caused it is no longer present, you will be asked for an explanatory letter. This along with evidence of current job stability and a timely payment history could make you eligible for home loan if you meet all the other requirements. If the question ‘How to improve my credit score?’ has been troubling you, I hope it will not do so any more.