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5 ways to score a better loan

If you’re looking to make a big purchase in the near future, such as buying a home, you’ve probably been looking intently at your credit to determine just what kind of a loan you can actually get. For millions of Americans, this is where the purchasing process comes to a screeching halt. Without a great credit score, few traditional lenders today will take the time to even meet with you, let alone offer you a loan.

Unfortunately, ignoring a low credit score won’t make the problem go away and is only likely to make the situation worse. Before you start wringing your hands in despair, you should know that tackling the issue head-on may be less of an undertaking than you would initially think. In fact, there are at least five legitimate, actionable things that you can do to help improve your credit score in very little time. Use the following tips to see your score – and your chances of owning a new home – get right back on track.

  1. Pay Your Bills on Time

This may seem simple, but it’s crucial.  This should be the very first step that you take if you have any real hope of getting a home loan, a car loan or even a handout from your grandma. If you cannot pay your bills on time, there is no reason to believe that you will have the resources available to pay your minimum balance on a new loan each month, especially if that loan is for a few hundred-thousand dollars. Lenders know this fact well. This is why your payment history makes up a huge amount – 35 percent – of your credit score. If your problem is organizational, set your accounts up for automatic payments and wait at least 6 months to help show that you have a solid history of paying on time.


  1. Keep Limits High and Balances Low

Another huge part of your credit score involves your revolving credit and how much credit you actually use each month. The goal is to make sure your revolving credit, or the total amount of credit you have available each month, is significantly greater than the amount you use in that time period. To get the best results, make sure this utilization ratio is less than 30 percent. What this really entails is keeping your balances low without closing out any older accounts, even if you no longer use them.


  1. Don’t Remove Old Debt

When you’ve done something right, you should reap all possible rewards, and your credit is no exception. Many people make the mistake of paying off a debt and then asking to have that debt removed from their report. This is the exact opposite of what you should do. If you have closed debts that were paid on time, fly the flag of honor and let them work for you on your credit report. Few things look better to a lender than 10 old debts that were paid in full and on time as agreed, because lenders know you are likely to continue the trend and pay them in full and on time as well.


  1. Dispute the Errors

Credit reports are made by people so naturally they can make mistakes. Few documented errors are likely to be as costly as errors on your credit report, so do what you need to do to make sure it is accurate. You are entitled to a free credit report from each of the three major bureaus each year, which means you can order a new report every four months. Scour them for errors and contact the reporting company with any questions or disputes.


  1. Don’t Be Afraid to Negotiate

If you have a longstanding relationship with a company, you may have some pull if you’ve gotten into a bind. Sometimes things happen, and creditors understand that and may be willing to work with you. It never hurts to ask if a creditor can remove a collections debt in return for payment in full. Or, if you were late on a few payments due to a hardship, contact the company and ask for those late payments to be removed from your report. The worst they could do is say no.


At Valley Mortgage, Inc., lenders understand that life happens and great credit scores, while helpful in the home-buying process, are not always possible. This is why lenders work with you to help improve your credit and find specialized programs that work best with your individual situation. The team members at Valley Mortgage always pledge to give you the kind of time and attention that you could never hope to experience with a traditional bank, so you can not only find a home but enjoy the entire home-buying process like you never knew possible.

For more information, call Brian Johnson or any of the highly-qualified staff at Valley Mortgage at 800-373-5654 or email info@valleymortgageinc.com.



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