It is amazing how one point on your credit score could literally cost you thousands of dollars in interest. Lets say you have a credit score of 639 and you are approved for a 30 year fixed rate loan for a home at 5.521%*. You would end up paying the bank $78,659 in interest over the course of the loan. That number itself is staggering, but what if you had a credit score of 640? You would fall into a different range and could be approved for a lower interest rate, say 4.975%. Over the same 30 years you will have paid $69,530 in interest. Just by improving your credit score 1 point, you will have saved $9,129! Lets push these numbers further:
Who would have thought that one number could have such a great impact on your finances?
Improving your credit score won’t just lower your monthly mortgage payments. It could also lower the interest rate on your credit cards, increase your line of credit, lower deposits for items such as utility bills and even save you money on your car insurance.
Most experienced agents/sellers will require that the buyer be pre-approved for a mortgage before they will work with them. This is especially true if you are working with a bank-owned or pre-foreclosed property. If a bank is in the picture, your ability to purchase the home usually depends on whether you can prove you can pay.
Obtaining a mortgage loan to buy a foreclosed house usually requires a credit score of at least 620 or more, but that doesn’t mean you have to assume that purchasing a foreclosure is impossible if your score is not high enough. If you have a low credit score, you do not have to accept it.
The most obvious ways to improve your credit score are paying your bills on time, keeping your credit card balance as low as possible and not buying too many items on credit at the same time. These are good long term ways to build your credit score up and keep it at the number you would like, they just take a while. If you have negative items on your credit already from being late on payments, then these methods move much slower. What’s worse is that these items stay on your credit report for 7 years. Enter credit repair.
Credit repair is not the same as debt consolidation. In fact, credit repair has one very distinct advantage:
Whereas debt consolidation combines all the debts you owe into one manageable payment, credit repair disputes these charges often having them removed from your credit report.
When you dispute a credit item, you are not always saying that you do not owe the debt, you are asking for the company to prove that they legally bought the debt from the original debtor. The company has 30 days to prove that they followed the proper guidelines to the credit agencies and if they can’t, it gets removed. This is a highly effective way to literally erase the mistakes of the past.
If you are serious about repairing your credit before buying a foreclosure, we highly recommend Lexington Law. Click here on the image below to visit their site and learn more about how they can help get your credit to where it needs to be.
* The rates shown are averages taken from myfica.com.
