Whether you’re looking for a home to rent to own or to purchase outright, having good credit is a vital part of the process. Your credit affects your ability to borrow money, as well as the interest rate you’ll be charged for the loan. If you’ve had some credit issues in the past, or if you don’t yet have a credit history, we’ve compiled a list of tips to help you establish or re-establish the credit you will need to make your home ownership dreams a reality.
First of all, it’s important to know what’s on your credit report. Your credit report shows several factors that lenders look at in determining if you qualify to purchase or rent to own a home. Items that have a negative impact on your credit include late payments, collections, and judgments or tax liens. Review your report for accuracy and make note of any of negative items that need to be addressed.
To get a copy of your credit report, contact one or all of the three credit bureaus: Equifax, Experian, and TransUnion.
Here are some generalized tips to help establish/re-establish your credit:
1. Make all payments on time. Typically, lending institutions look for at least 12 months of good payment history.
2. Pay active collections. Keep records of all conversations with debt collectors, payment receipts, etc.
3. Establish revolving debt. If used correctly, revolving debt such as a secured credit card will help you establish a good payment history.
4. Pay any judgments or tax liens. Make sure you get a “Satisfaction of Judgment” letter, and that it’s file stamped by the court house.
5. Make sure student loans are in good standing. Check with your lender to see if you qualify for deferment, forbearance, or consolidation to help with this.
For more details, and a list of helpful credit improvement resources, email our Customer Experience Manager, Ayanna, at ayanna@prohomebuyer.com.
