Getting Your Credit Ready for Mortgage Applications When You’re Low Income

It's no secret that several factors go into obtaining a mortgage including, the kind of home you're purchasing, income, and credit. The latter is often overlooked; bad credit could prevent you from obtaining a good rate or a loan.

If you're thinking of purchasing a home with NHL lending, you'll want to ensure your credit is healthy enough to qualify for a good rate and mortgage. Fortunately, our tips will help you get your credit ready.

Sustain a Credit History

Your credit history duration determines about 15% of your credit score and describes the duration in which you've had open accounts. The longer they've been open, the more time you'll have had to display your capacity to repay the money you owe.

While there isn't much you can do to alter credit history in the short-term, maintaining older accounts helps build your history. Remember, it's just as important to keep them active. If you don't use one of your cards frequently, consider setting up a recurring subscription charge on it.

Obtain a Secured Credit Card

You need credit in order to build credit; this can be difficult if you have a low income or are unemployed and lenders are unwilling to take a risk with you. If you find yourself in this situation, we recommend you obtain a secured credit card.

Credit unions and banks provide secured credit cards, which function like conventional credit cards but need a deposit that serves as your credit line. If you can save for a couple of months for the deposit and open the card, you can establish a score or add some positive information to increase your score by about nine months.

We recommend you use the card to pay for items in your budget already, for instance, utilities or transportation costs. This way, you know you can afford to pay off the card in full every month.

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Become an Authorized User on Somebody's Account

Another way of building credit history and improving your credit score is by becoming an authorized user on somebody's credit card. The key is finding somebody with good credit who's ready to help you in this way.

They don't need to give you that card but simply include your name as an authorized user. The card's activity will be included in your report, which will produce a positive history provided the user is responsible.

Obviously, there's the likelihood that the individual who authorizes you on the card might lag behind or use over 25%-30% of their accessible credit limit. In such a case, being an authorized user could damage your credit.

Get Assistance from a Nonprofit Credit Counselor

You might require the assistance of an expert to repair your credit. Thankfully, you can obtain low-cost assistance from a certified counselor. The counselor will take you through your budget and help you establish your choices to handle debt and enhance your credit.

Counselors also collaborate with creditors to help reduce fees and interest on your debt. They could even help if there's debt in collections. There's a lot you can accomplish by sitting down and engaging a credit counselor.

Don't evade debt collectors

In the event that you have debt in collections, it could have a huge influence on your score and credit report. Even one missed payment could cause a 100-300 point drop in the score. If you have numerous missed payments, the debt typically goes to a collection agency.

The last thing you want to do is evade debt collectors. If you do so, they'll probably assume the worst. In fact, they're likely to cooperate if they believe you're evading them. Therefore, you're better off responding to letters or calls instantly to explore your payment choices because debt collectors tend to be more eager to be flexible if you respond fast. In turn, you can be on the path to credit repair.

Federal loans

These are often accessible to low-income earners with good credit. If you've succeeded in credit building, you can apply for these programs through the Federal Housing Authority or Department of Education based on your needs. The loans are issued irrespective of the amount you earn and they're an excellent way of maintaining a good credit base.


By |2020-03-12T12:38:24+00:00September 26th, 2018|blogs|Comments Off on Getting Your Credit Ready for Mortgage Applications When You’re Low Income