The proper steps to fix your credit so you can get a mortgage

If you’re tired of paying someone else’s mortgage in the form of monthly rent payments as well as not being able to enjoy certain perks of home ownership such as choosing your own paint colors, you’ve probably given at least a little thought to purchasing a home of your own.

However, like many of those in your position, credit challenges may be holding you back from taking those initial steps toward buying your own home. Fortunately, strategies exist for getting your credit rating up to a level where it will be attractive to lenders.

Following are the proper steps you can start to take now in order to make your dream of home ownership a reality in the future.

Review Your Report and Refute Inaccurate Information

The first step to increasing your credit score is to take a good look at the information it contains. If something seems inaccurate, you have the option of entering into a dispute. What happens next is that the credit bureau will send a request to the creditor asking them to verify the information.

Some collection agencies actually ignore these requests, especially if they’ve given up on ever collecting the debt. If the request is ignored, the credit bureau will remove the information.

Consider Increasing Credit Card Limits

The ratio of your total credit usage compared to your amount of available credit also has a significant impact on your credit rating. Increasing your card limits while keeping your spending at the same level is an easy way to achieve a more desirable ratio.

You can also dial down your credit card spending for similar results if you don’t want to increase your limits. You can also increase your spending limits by opening another credit card but not putting any charges on it.

Pay Down Credit Card Balances

Paying down balances is one of the fastest ways to give your credit rating a boost.

Go through your finances and see what can be reasonably cut from your budget — keep in mind that it doesn’t take long for your rating to begin to climb once you start making serious progress in paying down balances, so you’ll only be on a bare-bones budget temporarily.

You might even consider taking a part-time job for a few months and using the earnings to pay down credit card debt if your current budget doesn’t have much wiggle room. Be sure to pay off the high-interest cards first.

Pay Your Bills on Time

This one should be a no-brainer — paying your bills on time helps keep your credit rating healthy, but all bills aren’t equal in this respect. If it’s necessary to be late on one or more of your monthly obligations, keep in mind that cell phone and utility providers generally don’t report to credit bureaus.

Explore Bad Credit Mortgage Providers

Those with FICO scores of under 620 may face significant challenges when seeking financing for a home purchase. However, there are lenders who specialize in bad credit mortgages who work with potential buyers and provide them with industry tips on getting their credit ratings into shape.