If your credit score is low then it would be hard to obtain a loan from a financial institution for you. Credit scores are one of the first criteria banks use when measuring whether a borrower represents an acceptable risk. Many homeowners and investors in America are struggling with their credit. Credit cards and loans are not easy to get anymore, but people still need them. So how can we overcome bad credit and qualify for the loans?
Here are top 10 ways that may help you to improve your credit score:
1. Check Your Credit Reports Properly: To improve your credit score, you should check your credit report to see if there are any mistakes. Your credit reports could have an error that could affect your credit scores. Make sure all your debts are registered to your correct name and current address. There is no sense in paying for mistakes you didn’t make, so keep your eyes on your credit reports. You can check credit report for incorrect addresses, personal information, outdated or duplicates information etc.
2. Lower Your Credit Utilization: It’s an important factor in your credit scores. To know your credit utilization ratio, divide your total credit balances by your total credit limits. Generally, using your maximum credit limit every month causes down your credit scores. To improve your credit score, try to keep your debt-to-credit ratio under 30 percent. You can improve your ratio via paying down your debt, also getting a higher credit limit will immediately drop your utilization rate, as long as you don’t spend more.
3. Care About Credit Applications: Don’t make too many applications for credit in a rush that includes things like mobile phone contracts. Lenders translate that as desperation. Space out applications. Also, don’t apply for new cards or cancel old ones. Having balances on many accounts reflects negatively on your credit, but simply having more available credit in total is positive.
4. Find A Co-Applicant With Good Credit Score: If you have a relative with good credit, get that person to co-sign a loan or a credit card application. That will instantly boost your credibility with the lender. Be sure you can pay your debts, or you might ruin your credit and your friendship with your co-signer.
5. Increase Your Down Payment: Most loans require a down payment from 20-30 percent. If you can increase the typical down payment by doubling or tripling the usual requirement, you’ll show the loan officer that you’re serious about your offer. The same is true with rental deposits. If you have bad credit, landlords may reconsider you if you provide three or four months’ rent upfront.
6.Explain Yourself: You can share the details on your credit report and attach your explanation to your credit file that goes out with each credit inquiry, and some hard money lenders might take that into consideration.
7. Pay Your Bills On Time: Not making payments in pull and on time every month is probably one of the worst things that put you into bad credit in the first place. It’s a bad news for consumers is that, typically, utility bills only appear on a credit report when they’re delinquent. So make sure you pay your utility bills, car payments, mortgage payments, etc. on time every month.
8. Get A Credit Card: If you have never had a credit card before, your scores may be suffering because of this. If you have a fair, good or excellent credit score, there are many credit card options out there for you. You can get a credit card and start using it, just make sure you make payments on-time in order to improve your credit score.
9. Open A Secured Credit Card: If you have bad credit, a secured credit card would be probably the best option for you. A secured credit card is a type of credit card where you make a deposit into a checking account that secures the line of credit the bank or lender is extending you. You can get one with bad credit and add a new account with a positive payment history will go a long way in showing creditors you’re back on solid ground.
10. Get Hard Money Loans: You can use hard money loans in order to improve your credit score. These loans come along with more flexible agreements compared to the traditional mortgage loans. Hard money loans for bad credit are very useful for those who have had past bankruptcies or foreclosures but have enough equity to be considered for a private money loan product. The hard money lender loans money based upon the value of the property that secures the loan. They are not as interested in your ability to repay. The value of the home is more important to them than your credit or financial standing. Hard money lenders also allow people to refinance existing debts. This can definitely help debtors to improve their credit score.
Conclusion:
Your credit score is one of the most important components within your financial realm. Focusing on the above factors is the best way to start improving a credit score. There are many advantages of having a good credit score. A good credit score can help you to qualify for the best interest rates and terms when you borrow money from financial institutions. So, it’s wise to check your credit report and credit scores regularly and do everything you can to improve your credit score.
If you have poor credit and really want to buy a particular home immediately and will lose it if you wait, getting a hard money loan would be a good choice for you. Many borrowers with poor credit get a hard money loan for six months to a year. Then, they work on getting their credit score up as quickly as they can. For more information about hard money loans, Call Us today at (310) 734 4044 or Email at info@magnaloans.com.
