Improving Your Credit and Qualifying for a Mortgage
Credit cards are a common part of our society, and because of this, their influence on your credit report is considered heavily in the mortgage process. To manage this responsibly, it’s ideal to keep them at a 30% or lower balance. Once you get above 30%, companies view you as irresponsible in the handling of your credit allowance, and you see a decrease in your overall credit rating.
Disputes on your credit report are bad, they show future creditors like a mortgage company, that you currently have an outstanding debt you are not satisfying. If possible, do no dispute accounts on your credit report prior applying for a mortgage or during the application process.
Settled for Less than Full Balance
If you have a debt that goes to collection, often times these collection agencies will settle your debt for less than full balance. The reason they are able to do this is because they buy this bad, defaulted debt for pennies on the dollar, and then try to get as much back as possible. It may seem like a good idea at first, because you are able to pay less; but future creditors look at this like you don’t fully meet your agreed upon debts. Try to pay in full if possible.
Bankruptcies and Mortgages
Some loans allow you to re apply for a mortgage only 2 years after the bankruptcy is DISCHARGED. Look in your bankruptcy paperwork and see the “date of discharge” paperwork. The soonest you can close on your mortgage will be 2 years after that date. It’s important to reestablish healthy , modest credit in these two years, underwriters will look at how you are handling your credit since the bankruptcy.
Applying for a Mortgage After Foreclosure
Most loans allow for reapplication 7 years after a foreclosure takes place. But FHA / VA loans have the ability to accept an applicant 4 years after a foreclosure. Make sure you reestablish healthy credit after your foreclosure.