Quote:
Originally Posted by sk16
Hi All,
I see a bunch of threads on mortgages but can anyone give some tips on how to prepare your credit for mortgage. my score is currently in the gutters (low) but I will have finished paying any loans in a few months. I did some have accounts closed and sent to collection when I was younger but I dont think some of those will come up on a credit check anymore.
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Well... It is simple. Pay off any loans in a timely manner. Do not have any credit card balance at the end of each month. Try to have consistent and stable spending on your credit cards each month. But, don't let credit balances roll over to next months resulting in interest payments.
It takes time to build credit. Watch YouTube videos about building credit for mortgage and stuff like that. They give general but helpful advice.
Due to the recession, many mortgage lenders now have strict requirements. So, if your credit score is not good and you don't have enough down payment, it will be really hard to find any lender willing to finance your home purchase right now.
If your credit score is as bad as you say, it will take a few years to build your credit.
Ideally... to get the best "deals"
1) Improve your credit score to 720~740 or above.
2) Save for a down payment for your future home. You want to have at least 20%. That is not necessary in a normal environment. But, at least now and for the foreseeable future, due to more strict requirements, a lot of lenders want 20%. So, if you are aiming to buy a home that is $300,000, you want to have $60,000.
3) Lower your monthly loan/debt payment as much as possible for your income-to-debt ratio.