One of the foremost aspects of buying a home is securing a mortgage. Securing a mortgage can be difficult if you have bad credit, and may result in an excessively high interest rate, or a complete denial of funds. Repairing your credit should be the first thing you do, before you apply for a mortgage.
Repairing your credit can be a lot of work, despite being so easy to ruin. If you miss a few payments, or lose your job, your credit rating can tank in the blink of an eye. There are several methods for tackling your credit repair, but they all require discipline and a rededication to self-control.
One popular method for repairing your credit is the Snowball Method, which entails listing every debt you have from smallest to largest and tackling them in the same order. By only making minimum payments on every debt except the smallest one, you stay on top of your payments while dedicating your minimum payment plus whatever extra you can afford to your smallest debt. Once that debt is paid off, you take that minimum payment and the extra you were putting on it and move those payments to the next debt in line. On top of the minimum payment you were already making on that debt, now you are also paying the minimum payment of the previous debt, plus whatever extra you can manage.
By maintaining this momentum, you can pay off several of your smaller debts in just a few months and make a significant debt in your larger ones. Within a year you will notice a massive change in your credit rating and you will see the effort you’ve made at repairing your credit has paid off. A good way to stay on top of things is by getting quarterly-credit reports to ensure you are on the right track. Another thing to consider is that you should review a preliminary credit report to ensure its accuracy. Any mistakes can affect your credit score as well.