A poor credit history can be a major hindrance in the process of purchasing a home. However, the credit report and adequate credit score plays a crucial role in determining whether the home loan would be granted or rejected. The reason behind this is that the credit report provides particulars about the economic or financial history of the debt payers. Therefore, if the credit report is not good enough or does not look favorable, it can be quite difficult to acquire a home loan.
The home loan consultant in Delhi suggests that before you proceed with the home shopping, you need to analyse the credit report and manage it in a way that it facilitates home loan. An increase in the credit score and upgradation of your credit report might take about few months to even a year. But, it will surely increase the chances of you moving to your dream house.
Low credit score
As you apply for a home loan, you will be charged a much higher interest rate if the credit score is low. In the present scenario, almost every mortgage company now has distinctive programs designed to help those with bad credit receive loans for the purpose of home purchase. One might also be required to pay a higher down payment of cash as a result of low score. In the low score situation, there exists a probability of loan being repudiated as well.
Ways to Fix your Credit to Buy a Home
- If you are working to improve your credit in order to buy a home, it is important that receive a copy of your credit reports from the respective credit reporting agencies. There are only a few creditors who send information to all the agencies. If the mortgage lender pulls your report to check your credit history, they will use the middle score obtained from the different agencies to decide whether or not to qualify you for a loan.
- You need to collect information on the report and verify that everything is correct such as the name, address etc. You might notice errors on the credit report, which could be responsible for bringing down the credit score. These errors could be due to various reasons which need to be carefully observed and resolved.
- The improvement of the credit report essentially requires altercation of letters through the certified mail. You may seek the support of a trustworthy credit repair agency in case you cannot invest too much time on it. The expert professionals of such agencies can very well manage the financial repair work of this nature.
- Once all the disputed aspects are eliminated from the credit report, you can request the credit bureau to mail you the rectified copy.
- It needs to be noted that there is no easy and instant way to repair the credit report. Therefore, keeping patience with the process is imperative.
- It is possible to get a pre-approval for a home loan. But, firstly, you must get your credit card report clean, pay off all the unsettled debts and try to enhance your credit score to the extent it is possible. Once you are through all these essential process, you can avail a pre-approval certificate from the mortgage lender or broker.
Conclusion:-
If each and every concerned aspect is worked out well as you apply for the loan, you need to be cautious about not complicating the other things. Do not invest on any other expensive thing in that period. Since, it can damage the entire loan process. In order to be on the safer side, avoid applying for any other loan in such a situation. Or else, you could lose out on the house you wish to purchase.