Improving Your Most Important Buying Power: Credit
It is possible for errors to appear on a credit report. If this happens, your credit score and probability of being approved for a mortgage loan could be damaged. So its very important that you obtain a copy of your credit report from all three agencies before you apply for your mortgage loan. You can contact them by phone or via the Internet. In six states, you can obtain a copy of your report for free. Elsewhere, you will be charged a fee. Be sure to contact all three agencies because the information contained in each database in not identical.
Errors on your credit reports must be handled immediately. You must correspond with the reporting company, explaining the error and ask for it to be removed. The reporting company has 30 days in which to reply. If you are in the process of taking out a loan, you should notify your creditor, providing copies of all correspondence with the credit agency.
You can improve you credit profile in a number of ways. First, pay your bills on time. This is certainly the most obvious way. Make the full required payment, not a portion of the minimum due. While you creditor will gladly accept a payment larger that the minimum, any amount below the minimum will be considered a partial and/or late payment.
Too much debt can place a negative impact on your credit rating. Do not maximize out your cards through buying to the credit limit of your cards. To help reduce your loan period and interest paid while increasing your credit rating, pay more than the minimum required. On a $500 loan at 18% interest, you can increase you minimum from $15 to $35 with the following results: Payment period reduces from 47 to 17 months, and interest payments reduce from $190 to $67.
Limit the number of credit cards you have. Otherwise, its too tempting to take down additional debt and become over loaded. Avoid impulse buying on major purchases. In fact, save up for such purchases to avoid relying on credit altogether. Also, remember that you are responsible for all joint accounts you have opened with another individual and for all loans on which you are a co-signer. If the other party charges items on the joint account and neglects to make payments as agreed, the bad news appears on your credit report as well as on theirs.
By law, most negative credit information must be removed after 7 years. A bankruptcy, however, will remain for up to 10 years. A good review of your credit report at least annually and preferably more often is well advised.
Nontraditional Credit are those financial transactions that would not normally appear on a credit report. If you do not have a traditional credit history, you can still obtain credit and apply for a mortgage loan, but you must be able to provide the documentation required. Lenders are typically willing to consider written proof for such items as rent, utilities, telephone, cable TV, etc.
I love investing in real estate because of my income potential, but the most important aspect of all of this is the fact that we are putting families into homes, and then helping them through the buying process for them to become the actual homeowner. Always use the pay-it-forward program in everything that you do, and the money will always come!
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