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The Effects of a Low Credit Score on Purchasing a Home
Buying a Home with a Low Credit Score
When a lender considers approving your mortgage application, it goes something like this: What is your credit score? What is your credit history? What is your income? How much debt do you have? How much will your down payment be?
A huge down payment may dilute the negative effects of a spotty payment history or low credit score. However, be prepared for high fees and mortgage interest. In fact, the minimum score needed to purchase a home has increased in the past 12-18 months.
There is no way to distance yourself from having a low credit score. A good credit history is necessary to purchase a home, even if you do have a large down payment handy. According to CNN.com, a prospective homeowner’s credit score goal should be an average of 758 in order to obtain the lowest interest rates.
Find Out How to Raise Your Credit Score and Improve Your Chances of Purchasing a Home
With minimal effort you can obtain your report and see exactly what is there. Often there will be mistakes or errors that you can dispute.
You can start with a dispute letter to the credit bureau(s). Otherwise, you will have to work directly with the creditor to resolve the mistake.
Often, an expertly worded dispute letter will resolve the inconsistency. Although, it has been shown that investigation methods are often sloppy and error prone.
This is because credit bureaus must spend potential profits on time and resources to investigate any dispute. The unfortunate truth is that some credit bureaus have found it cost effective to delay or ignore your dispute. Their hope is that you will give up on your dispute.
How Long Will I Have to Wait to See an Improvement in My Credit Score?
Often people want to know how long it will take to see an improvment in their credit score. This answer, of course, is dependent upon the individual situation, however, in many cases, an improvement may be seen by 6-12 months.
Although this may seem like an extremely long time, it is exceedingly shorter than waiting 7-10 years for the negative information to be erased. If you plan to purchase a home, it is imperative that you wait the 6-12 months to clear your credit report of any negative information.
Discover how I raised my credit score from 582 to 745 in four months with the help of Lexington Law. Learn the truth about quickly and effectively deleting bad credit at www.creditforcouples.com.
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