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Buying a Home with a Low Credit ScoreWhen a lender considers approving your mortgage application, it goes something like this: First, what is your credit score? Second, what is your credit history? Third, how much money do you make? Fourth, how much debt do you have? Fifth, how much money do you have for a down payment? A gigantically large down payment may dilute the negative effects of a spotty payment history or low credit score to some extent. However be prepared for high fees and interest throughout the life of your mortgage. In short, there is no way around having a low credit score. Even with a large down payment you will still need a good credit score to make home ownership a reality. How High a Credit Score Do You Need?Specifically, you should aim to have a 758 average credit score to qualify for the lowest interest rates, according to CNN.com. You have always needed a good credit score to qualify for the best mortgage rates. This was true before the credit crisis, but now it is more important than ever before. In fact, the minimum score needed has gone up in the past 12-18 months as mortgage companies continue to be more demanding. How to Obtain the Minimum Credit Score for a MortgageYour credit score can be a very confusing topic. However, if you focus simply on removing any bad credit information, you can make good progress. The "experts" claim that you cannot remove derogatory information from your report. They want you to believe that there is no way to raise a low score without waiting for the bad credit to automatically disappear - often taking 7-10 years. However, with minimal effort you can obtain your report and see exactly what is there. Often there will be mistakes or errors that you can dispute before the 7-10 year period. To dispute these errors you can start with a dispute letter addressed to the credit bureau or credit bureaus. Otherwise, you will have to work directly with the creditor to resolve the mistake. Often, an expertly worded credit dispute letter will resolve the inconsistency. Although it has been shown that investigation methods are often sloppy and error prone. This is because they, meaning the credit bureaus, must spend potential profits on time and resources to investigate any dispute. The unfortunate truth is that some credit bureaus have found it more cost effective to delay or ignore your dispute altogether. Their hope is that you will give up on your dispute and just live with the high cost of bad credit. This is why many people hire credit repair services to use the dispute process for them. How Long Will it Take to Raise a Low Credit ScoreA frequent concern is how long will it take to improve a low credit score. Although every person's situation is unique, if you are looking for a fairly drastic improvement, then you should expect anywhere between 6 to 12 months before your report is clean. This is a long time but it certainly beats waiting for seven to ten years for the negative information to be dropped on its own. It is worth waiting an extra 6 to 12 months to raise a low score, especially when purchasing a house.You may be able to see your credit score improve in a few weeks or months as opposed to a few years. In 2008 alone, the legal experts at Lexington Law were successful in removing over 665,000 negative items from their clients' credit reports. With their help, you can be an active participant in shaping your credit's future. HomeBack to List of Articles Blog Explore our Sitemap
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