2022 Real Estate Guide: Credit Repair

It’s home buying season so you know what that means! CREDIT CHECKS, CREDIT CHECKS! Once you’ve made the decision to purchase a home, the next step is to consider your credit and we know how difficult that can be to maneuver, especially if this is your first time purchasing a home. Before we dive right in, let’s cover what credit is briefly .

Credit is the ability and/or opportunity to borrow money or access goods with the promise of repayment — In other words an “I Owe You”. There are many different types of credit ( Revolving, Installments, etc.) and brands of credit (think FICO). The Fair Isaac Corp (FICO) score, created in 1989, is what lenders look at when they decided how much money to give you and if they want to give any at all —

Now, this blog is not selling you a dollar and a dream. Building up to good credit does not happen overnight, however with these simple tips, we can make the change we truly need — Short or long term– read on!

#1. Before you start repairing your credit, you first need to check what is on your credit report to better inform you what you need to work on. You can request a FREE copy of your credit report from sites like annualcreditreport www.annualcreditreport.com

#2. Be realistic. Be honest. If you are in bankruptcy or have a very large balance to pay off, be honest with yourself and acknowledge this will take some time. At this point it’s strongly suggested you write out an actual plan to keep you focus.

#3. DISPUTE DISPUT DISPUTE! Remove what’s not yours. Often times many people have poor credit – no fault of there’s. In cases like this, it is important to dispute those charges as quickly as you find them. This is one of the easiest way to raise your credit by a chunk, which does vary. Experian is a great site that helps you keep track of your credit and allows you to dispute online if you have an account with them. If online does not work for you, you have the option of mailing in a dispute letter to the credit bureau explaining to them the error.

#4. Open a Secured Credit Card – A secured card works essentially the same as a bank debit card would – You put money on, you take money off. In other words, you can only use money you deposited into the account, which will help establish a credit history.

#5. Become an authorized user on a credit card. If you have a trusted family member or close friend that is doing well with their credit, this may work for you. This works the same way as a regular credit card would, but be mindful that every payment posted or missed, will affect BOTH the cardholder and the authorized user.

#6. Use your credit card (if you already don’t). It may sound a bit.. counter productive, but trust me it’s not. In order to get credit, you have to use credit. If you already have a credit card or just got a credit card, make sure to use the card from time to time. Just having it open will not be enough to build your credit. Making small purchases and paying it off reasonably will allow you to build.

#7. Paying your bills before time is paying your bills ON time.

#8. HACK ALERT! Make 2 payments every 2 weeks instead of once a month – This little tip has helped me out more times than I can count. Making a double payment in the same month will help give an extra boost to your score.

#9. Keep credit utilization down – under 30%. This always looks good on your credit report. Let’s try to keep credit card purchases down as much as possible or make sure you’re making your payments accordingly so we don’t end up in a tough situation

#10. Don’t open a lot of new accounts too rapidly especially if you don’t have a lot of credit history. On the other hand, DO try to shop around with multiple lenders to see the best deal you can get — This will also allow you the opportunity to negotiate your rate to get it lower.

#11. Have a variety of accounts – Lenders  look for a  mix of accounts on your credit file . This shows that you can handle different types of credit, which in turn makes you more trustworthy to lend money to.

#12. If you Regularly pay your rent on time, it may be beneficial to add rent payments to your credit report! This will boost the amount of positive information reported to the credit bureaus.

#13. Work with a non-profit credit agency – If you’re not sure how to set up a budget or how to start paying off your debt, reach out to a non profit credit agency and they typically offer a free consultation – places such as incharge  offers free, low cost services to help get your credit on track. https://www.incharge.org/

#14. Ask your Credit card company to raise your limits – This will help keep your credit utilization down because remember – we want to use less than 30%

#15. Try to avoid closing any credit cards even if you don’t need them – Closing the cards essentially lowers your credit limit and increases credit utilization. On the other hand, don’t just open up accounts randomly. Each time you apply for a loan or card, information is being requested from the credit bureau. Requests made within the past 2 years remain on your credit and can lower it as well.

#16. Have Patience – Improving your credit is not an immediate process. Credit scores that are in the ranks take years and years of continuous effort to build and with the help of these tips, you can start seeing small improvements. If 2021 brought confusion and stress trying to keep up with your bills and credit  — Let 2022 be the year you do your best and actually start applying yourselves – To Good Credit!

We are here to help! Please reach out to us directly here at The Claircius Group International, where we do our best to help you maneuver through this Real Estate bubble.