How To Improve Your Credit Scores
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How To Improve Your Credit Scores To Qualify For a Mortgage


In this article, we will cover how to improve your credit scores to qualify for mortgage. There are many ways how to improve your credit scores to qualify for mortgage. It is not too difficult and many times, just applying a few simple techniques can do wonders. The team at Non-QM Mortgage Lenders are experts in helping our clients rebuild and boost their credit scores.

Non-QM Mortgage Lenders have tips on how to improve your credit scores to qualify for mortgage that is fast, easy, and works.

The team at Non-QM Mortgage Lenders has helped countless clients rebuild and reestablish their credit after bankruptcy. Most of our clients we helped have credit scores higher than 700 FICO in less than one year after the bankruptcy discharged date. You do not need to hire expensive credit repair companies to fix your credit. All credit disputes that are non-exempt need to be removed during the mortgage process. Credit repair often does more damage than good for borrowers trying to qualify for a mortgage.

Credit Disputes During the Mortgage Process Is Not Allowed

Remember that credit disputes are not permitted during the mortgage process. All credit disputes with any credit reporting agencies need to be retracted if borrowers intend on applying for a mortgage loan.  For those who just filed for bankruptcy or had a recent foreclosure and are starting a credit repair program, whether it is done on their own or by hiring a credit repair company, there are things they should know about how certain derogatory credit deletions can affect the mortgage process.

There are ways of improving credit scores also by simply paying down credit card balances and obtaining new credit. One of the most effective ways of boosting credit scores is by getting three secured credit cards with a $500 credit limit on each secured credit card.

Each secured credit card can boost credit scores by at least 20 or more points. Some have seen their credit scores increase as much as 100 points with just three secured credit cards in a matter of just a few months. Remember to keep credit card balances below the 10% balance limit for maximum optimization. Another thing to need to keep in mind is that high balances on credit cards will lower credit scores.

How To Improve Your Credit Scores With Derogatory Tradelines

By reducing a revolving credit account balance below the 10% credit limit can improve credit scores by 10 to 30 points for consumers who have multiple open revolving credit accounts. For those with only 2 or fewer revolving credit accounts, reducing credit account balance below the 10% credit balance limit will improve credit scores by 15 to 40 points.

A recent collection account can drop credit scores by 50 to 70 points.

Outstanding collections and/or charged-off accounts do not have to be paid to qualify for owner-occupant primary home loans. As the outstanding and/or charged-off accounts age, it has less of an impact on consumer credit scores.

How To Improve Your Credit Scores With Late Payments

A recent late payment can drop credit scores by 50 or more points. A recent mortgage payment that has been 30 days late can drop scores by 70 to 90 points. A recent mortgage payment that has been 90 days late will drop credit scores 70 to 90 points. However, as late payments age over time, they will less impact consumer credit scores.

Impact of Short Sale and Deed In Lieu on Your Credit Scores

A recent short sale or deed in lieu of foreclosure can easily drop scores any deficiency credit scores by more than 80 points. However, as the short sale and deed in lieu of foreclosure ages, the consumer credit scores will eventually increase. A bankruptcy on a credit report can drop credit scores by 150 to 200 points. Again, as the bankruptcy ages and time passes, consumer credit scores will go back up.

Credit Repair and Re-Establishing Credit

How to fix and restore the loan

Credit and credit scores are probably the most important thing one can do after periods of bad credit or after bankruptcy and/or foreclosure. It is as important as monitoring banking accounts.

Having bad credit can cost thousands, if not hundreds of thousands, of dollars in higher mortgage rates on mortgage, credit card interest payments, and insurance premiums. Many insurance companies will deny insurance for bad credit.

Others can charge substantially more in insurance premiums for having bad credit.   Many employers now check candidate’s credit during their hiring and promotional process. Consumers who need additional credit advice, visit us at Non-QM Mortgage Lenders Mortgage News, a national mortgage, credit, and real estate informational super website.

Quick Fixes To Boost Your Credit Scores For Mortgage

Borrowers with credit scores above 620 FICO, debt-to-income ratio requirements to get an approve/eligible per AUS FINDINGS is 46.9% front-end and 56.9% back-end on FHA loans. However, if credit scores are below 620 FICO, the debt-to-income ratio can drastically reduced to 31% front-end and 43% back-end to get an approve/eligible per Automated Underwriting System Findings:

  • A potential home buyer who is looking to purchase a home in the near future should contact a mortgage loan originator to get qualified and pre-approved.
  • The loan officer will check and see what is needed to do quick fixes to boost your credit scores for a mortgage.
  • There are many quick fixes to improve your credit scores for mortgage besides paying monthly bills on time.

Things That Will Hurt Scores

Those with prior bad credit and outstanding collections and/or charge-off accounts do not have to pay those balances off to qualify for FHA loans. By paying off old debt or open collections, that will drop credit scores. This happens because it activates an old credit account and makes it a current derogatory. Old negative credit accounts or collection accounts will not affect a mortgage borrower from qualifying for FHA loans. Once consumers pass the 7-year statute of limitations, it will fall off the credit report.

Bad credit accounts and collection accounts over two years old have extremely little or no impact on credit scores. Home buyers can qualify for a mortgage loan with old bad debt and/or open collection accounts.

Do not pay off any old bad debts with balances until speaking with a mortgage loan originator. Credit Repair is not necessary to qualify for mortgage loans. Credit disputes during the mortgage process is not allowed. Credit repair can do more damage than good when trying to qualify for a mortgage.

Credit Inquiries During Mortgage Process

Don’t apply for new credit unless absolutely necessary. Each credit inquiry will drop your credit scores by as much as 5 points. There are cases where people apply for a dozen credit cards all at once. This will plummet credit scores and will most likely disqualify you from obtaining a residential mortgage loan.

Advice on Quick Fixes to Boost your Credit Scores For Mortgage

High balances on credit cards will drop credit scores. By paying down credit balances down to 25% of the credit limit, scores will greatly improve by the next credit reporting period. This strategy is some quick fixes to boost your credit scores.

There are many cases where a consumer’s credit scores improve by more than 70 or more points just by paying down their credit card balances down to 10% of the credit limit level.

Prior Bad Credit or No Credit: Quick Fixes To Boost Your Credit Scores 

For consumers with prior bad credit and currently have no credit, credit scores are probably low. There are some quick fixes to boost credit scores. However, the easiest and fastest way of boosting credit scores and re-establishing credit is by getting a few secured credit cards. Adding new positive revolving accounts will do wonders. One $500 credit limit secured credit card can boost credit scores by 20 or more points. The ideal amount of credit cards is to get is three, $500 limit secured credit cards. Those who have low credit scores or recent prior bad credit, do not bother and waste time in trying to get approved for an unsecured credit card. The chances are it will get denied.

Getting Qualified and Pre-Approved For a Mortgage

Borrowers who need to qualify for a mortgage with a mortgage company licensed in multiple states with no lender overlays on government and conventional loans can contact us at 800-900-8569. Or text us for a faster response. Or email us at gcho@gustancho.com. The team at GCA Forums Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

This guide on quick fixes to boost your credit scores for mortgage was updated on 17 December, 2024.

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