Your credit score is one of the most important factors that lenders look at when they are determining whether or not to grant you a mortgage. And while the team at AKAL Mortgages, can help you get a home loan even with poor credit, you will have many more options if you first fix your bad credit score. So how exactly do you fix a bad credit score? Here are a few tips that will help.
1. Check your credit report.
The first thing you should do is check your credit report. You can do this for free once a year from Equifax and TransUnion (so theoretically, you can check your report every six months at no cost to you if you alternate between the two credit bureaus).
Checking your report will help you to determine the cause of your bad credit (eg. Too many late payments) and it will also help you discover whether there are any errors (yes, credit bureaus do sometimes make mistakes!). If there are any errors, you should contact the credit bureau right away to have them corrected.
2. Make arrangements to pay down debt and bring your accounts up to date.
If you are struggling with debt and can’t even afford to make the minimum payments on each account every month, then it is time to start calling your lenders and making arrangements with them to lower your monthly minimum payments and/or reduce your interest.
Most lenders will be willing to work with you because they would much rather see you pay off your debts at a slower pace than declare bankruptcy.
3. Make at least your minimum payments every month.
Stay diligent in making at least your minimum payments every month. As soon as you are late or your payment is less than the minimum, it will affect your credit score. The later you are in making the minimum payment, the more harmful it will be to your credit score.
4. Create a budget – and stick to it.
Sometimes simply having willpower “not to overspend” is not enough. Take some time and figure out what your monthly expenses are (include items like rent, car payments, insurance, groceries, utilities, debt payments, clothing, entertainment etc.) and then compare it to how much money you are making each month.
If your expenses are more than your income, you will either need to find places where you can cut expenses or ways that you can earn more income. Developing and following a budget isn’t always fun but it is one of the most useful things that you can do to repair bad credit.
If you would like to talk to someone about more ways that you can repair bad credit, contact AKAL Mortgages today.
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