Just paid off all my years of outstanding debt. Looking to rebuild my credit and buy a new home.What

About 5 months ago I paid off all of my outstanding debt (credit cards, overdue bills, medical bills, etc...) I now want to purchase a new home. How can I raise my credit score so that I can get a great quote on a mortgage loan?

Just paid off all my years of outstanding debt. Looking to rebuild my credit and buy a new home.What can I do?

Congrats on managing to pay off the outstanding debt you owe. Now hopefully, you have a better understanding of the true meaning and importance of credit. To understand how to rebuild your credit, you must first know what makes up your score:

1. Payment history- 35%

2. Total debt owed vs. Available Credit- 30%

3. Length of time establishing credit- 15%

4. Types of credit established- 10%

5. Inquiries and New Accounts- 10%

With the way the current mortgage/lending situation is, buying a house is going to be harder than it has been before. It%26#039;s going to take more than a credit score to get you in. Factors like time on job, down payment among other things will now be taken into more consideration. But that doesn%26#039;t mean that you shouldn%26#039;t improve your credit score. What I%26#039;m about to tell you is the best route to go.

Since you%26#039;re thinking of buying a house, chances are you%26#039;re going to be required to put a considerable down payment to get a decent mortgage nowadays, so you%26#039;ll need to start saving up. Also you%26#039;ll need to start showing that you have some positive accounts reporting on your credit to start raising your score.

It%26#039;s important not to apply for too much credit, becuase it causes a hard inquiry which lowers your score several points regardless of approval or denial. So the easiest would thing to get approved for would be a secured credit card. It%26#039;s easier to get than regular cards because you would have to place a deposit that%26#039;s used as collateral to secure a credit line, for example, you place a deposit of $300, your credit line would be $300. But this can work to your full advantage because since most secured cards are linked to a savings account, you could invest what would be saving up for your down payment towards the house and build credit at the same time. This is what I mean.

You open up a secured card, whatever you%26#039;re going to save for your down payment, you add to the deposit since it%26#039;s practically a savings account anyway. The more you add to the depsoit, the higher the limit, the better it looks when it reports on your credit because you%26#039;re creating a cushion of avaialble credit versus what you owe, which counts as 30% of your score. A good practice of using the card would be to treat it as if it only had a $50 limit on it, even though you should add to the deposit as much as possible to boost the limit as high as you can make it. Keep in mind that the deposit will eventually be your down payment towards your house, or at least a portion of it anyway. As long as you make small purchases ($20/month), pay them off on time every month to show activity, usually after a year or so, the card either converts to a regular card, or a better card%26#039;s offered, and most importantly, the deposit isn%26#039;t needed anymore and it%26#039;s given back. After it%26#039;s said and done, you will have rebuilt your credit by custom building a high limit credit card, while saving up for your down payment all at the same time!

I posted several links to some secured credit card companies that may work for you

Good Luck!

Just paid off all my years of outstanding debt. Looking to rebuild my credit and buy a new home.What can I do?

I am glad you were able to pay off all your outstanding debts (%26quot;about five months ago%26quot;) as you rightly stated. However, before attempting to raise your credit score, I should think that the first thing you ought to do is to personally request for a copy of your credit report and score from each of the three major credit bureaus. Your credit score will not be affected if you pull your credit profile by yourself once in six-month (but opening new accounts within a very short space of time will definitely hurt your score).

If this is done, apart from knowing your score, you will also be able to verify the accuracy of the information listed on your credit report.

If your score is less than 670, you might be far from getting an excellent interest rate. Therefore to now improve your credit score, please do the following: Don%26#039;t close your credit card accounts, for instance, but continue to use and manage those accounts wisely and responsibly: avoiding late payment, not exceeding your credit limit, and endeavoring not to exceed 30% usage of your credit limit each month, nor opening new accounts within the period since you intend to purchase a new home soon.

If you follow the above instructions, I am quite confident that your credit score will rise substantially in as little as 12 months thereafter.

In conclusion, please don%26#039;t be in a hurry to purchase a new home if your score is low. The implication is that, even if you succeed in obtaining the loan, your interest rate will be very high, thereby making your mortgage payment very high too. I am sure you certainly don%26#039;t want that to happen to you.

Best wishes!

RICHARD

Just paid off all my years of outstanding debt. Looking to rebuild my credit and buy a new home.What can I do?

You could use credit repair and /or add a seasoned tradeline to your credit report. Check out the free evaluation form at www.totaldebtsolutionsllc.com They can help you with either as they did me. Good luck.

Just paid off all my years of outstanding debt. Looking to rebuild my credit and buy a new home.What can I do?

First, check your credit report %26amp; score. If your score happens to be 700 or above already, you might decide to apply for a mortgage now.

If you have established lines of credit still open (ie old credit cards), excellent. If you have other history on your account as well (ie student loans) so much the better. It%26#039;s best to show responsible use on accounts that are at least 6 months old before applying for a mortgage. The older the account, the better.

Having 2-3 of credit cards/lines of credit is a good idea. If you need to apply for credit, and your score is low, secured credit cards are probably the only option available, but some stores have easily available credit. Make sure you get all of your applications done in a short period of time, to prevent damage to your score, keep it within 2 weeks.

Once you have the accounts in place, just spend at least 6 months building up a perfect history (using the cards every month, using less than 30% of the available balance, paying on time or early).

Watch your credit report, make sure they all get reported correctly. At the end of 6 months, your score probably won%26#039;t be great, but it%26#039;ll be stable enough that banks will consider you.

Don%26#039;t forget the noncredit factors, like staying in the same job, same residence, having good banking history, and saving up for the deposit. 5% is plausible, 10-15% makes it easier.

*

If the conventional bank loan doesn%26#039;t work for you, some home owners will offer rent-to-own, owner financed mortgages, or other unusual options. (This is rare, but sometimes happens, especially if they%26#039;re desperate to sell, or are independently wealthy). Evaluate these offers CAREFULLY, they may be good, and may be negotiable.