So, you have saved up enough money for a down payment on a new home? Unfortunately, because of your low credit score, you are finding it more and more difficult to find a lender who can accommodate your financial help request. In simple terms, you are having a hard time qualifying for a mortgage to let you buy the home of your dreams. But don’t worry; there is a good way to go around this problem. And that is improving your current credit score prior to applying for the mortgage. Here are some proven ways to improve your chances of getting approved and locking in an affordable interest rate.
Start by getting your credit reports and checking for errors
Mistakes do happen, and when they do, you really do not want to be the last person to know about them. When it comes to credit score mistakes, these are a bit serious as they can frustrate your chances of getting a mortgage to buy that home you have always dreamt of. Before applying for a mortgage, it is recommended that you get free credit reports online from major credit bureaus. Once you have done this, make sure to go through them line by line, checking for inconsistencies. If you come across an error, the best way forward is to file a dispute as soon as you can.
Some credit bureaus have online dispute forms that you can fill in your dispute. After submitting the forms, the credit bureau contacts the source, and the claim is investigated within thirty days. If online filling can’t work for you, then you have the option of sending a letter or dispute directly to the credit reporting service providers with copies of supporting documents. Make sure to send the supporting documentation through certified mail so as make sure the credit reporting company receives your dispute.
Make a point of paying off your credit cards
If you are up to your ears in credit card debt, the majority of mortgage lenders will think twice before offering you a home loan because both your debt-to-income ratio and credit utilization will be too high to make a sound financial sense. The best way to solve this problem is to start paying off your credit card debts before sending out mortgage applications. To fast pay off these balances, make a point of paying more than the minimum payments on your cards. This not only will greatly improve your credit score and lower your overall debt load, it will also saves you money of interest and show potential lenders that you are serious about repaying what you owe.
Shop around with a purpose
Before settling for any given lender, it is advisable to shop around for a mortgage product that come with the best rates. However, you should not let this search to go on without taking the necessary action because after a month of searching as could negatively affect your credit score. To stay on the safe side, it is recommended that you keep your search focused and brief. And if you can, get pre-approved for a mortgage before even shopping for a home. This way, if you find a house of your dreams, there won’t be a need to worry about getting approved for a loan later.
Simply stop applying for new credit
Most people when moving into a new home are also interested in getting new furniture to fill up the rooms or getting a new car for their driveway. If they don’t have ready cash to pay for these items, most people simply apply for new loans to offset these expenses. It is strongly advisable to hold off on new loan applications, may it be an auto loan or new credit cards, until you have locked down the mortgage. Even if your credit report is as clean as they come, when you send in your application, and there are too many new inquiries, this might raise red flags for the lenders.
If you are looking for the best mortgage rates in Quebec, do contact us today. We are also able to help those who do not have a good credit score so get started on a discussion with us!