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How to fix your credit to buy a house

Dena Standley | October 19, 2022

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

You in the near future^^

Summary: If you're in the market to buy a house and struggling to improve your credit due to a debt lawsuit, SoloSuit can help you take a stand and win in court.

Can you remember your first credit card or student loan application? Since that time, many companies have monitored and inspected your finances routinely. Financial institutions look at your credit score from the three major credit bureaus to understand your financial health.

A mortgage lender will use the reports from Experian, Equifax, and Transunion to determine the likelihood that you will repay the loan. Fair Isaac Corporation's FICO score (based on all those credit reports) has become a standard for lenders to evaluate credit reports. Overall, it gives them an idea of your worthiness as a home buyer.

Getting the mortgage loan and the home you want at a price you can afford may be possible if you fix your credit. Here's how to raise your credit score to become a homeowner.

Make sure your credit report is correct

Every year, consumers have free access to all three credit reports from annualcreditreport.com under the Fair Credit Reporting Act. Your primary concern should be errors in your credit reports with Equifax, TransUnion, and Experian. Look for‌:

  • Errors in accounts (misspelled names, incorrect personal information, etc.)
    • Accounts with duplicate information
  • Identity theft-related of fraudulent accounts
  • Older negative information, such as seven-year-old accounts
  • Errors in the date of first delinquency on a collection account
  • Incorrect payment status
  • Ex-spouse accounts or information

If there are any errors, ‌ file a formal dispute with the credit reporting bureau. In 30 days, the bureau will investigate your claim and let you know the outcome. A status check of pending claims is available online.

Pay all your bills on time

Paying your utility bills, cell phone service bills, and installment loans—such as personal loans and student loans—on time is essential for establishing excellent credit. Consider setting up automatic payments through your lender and ensure to pay the minimum fee stated on your bill on time. In most cases, low credit scores result from missed or late payments.

Pay down your credit card debt

At 30%, credit utilization makes up the second-highest percentage of credit scores. Credit utilization refers to how much credit you're using compared to your available limit. When you use less of it, creditors will see that you are managing your debt well. It is acceptable to use 20-30% of your credit limit. For example, if your card has a $10,000 credit limit, you should try not to exceed $2,000 to $3,000 per billing cycle.

Your finances may be in disarray if you use more than you can repay. But you can improve your credit utilization rate simply by paying off your credit card debt or paying it down. Your credit score can improve by up to 30% in a few months when you have no balances on your cards.

While you're looking for a home, keeping your credit balances low will show lenders you're not relying on credit cards to make ends meet.

Sign up as an authorized user

If you have a limited credit history, becoming an authorized user may assist you in building credit. It's helpful to have family members or friends with excellent credit and even good credit scores add you as an authorized user to their accounts.

FICO® Credit Score Rating
No. Credit Score Grade
1. 800–850 Exceptional
2. 740–799 Very Good
3. 670–739 Good
4. 580–669 Fair
5. 300–579 Poor

In reality, you do not use these accounts. But the records of your family's good credit will show up on your credit report and raise your credit rating. You should also know becoming an authorized user may negatively affect your credit rating if your family member has late payments or high balances.

Ask for rapid rescoring

Several mortgage lenders offer what's known as a rapid rescore ‌to raise clients' credit scores quickly. A credit agency receives accurate information and replaces it within five business days instead of a month. Lenders or companies specializing in rapid rescoring, with access to credit bureau data, can do it.

Rapid rescoring fixes errors and not late payments, even where it was an honest mistake. However, if your creditor makes a late report and you have proof of your timely payment, rapid rescoring may ‌help. The process can take 30 days or more if you do it yourself.

They can also use it to update a credit score instantly. You might need rapid rescoring if you've paid off your credit card balance - or most of it - but the lesser amount hasn't yet appeared in your credit report.

Try to avoid taking out new credit cards and loans

When applying for new credit options, take your time if you're considering buying a house soon. Your average credit age is critical in determining your credit score, and credit bureaus look for long-term, well-managed accounts. Three new credit accounts in a month is a no because inquiries on your credit report significantly affect your credit score.

Besides, choose merchants most likely to approve your application—a local bank, fuel merchant, or department store. Avoid opening new accounts in the months leading up to your mortgage application. It can increase your Debt-to-Income Ratio (DTI ratio) and lower your score in one fell swoop. We suggest ‌you get a mortgage before making large purchases and wait to finance furniture and a new car until your closing day.

You can restore your credit score by taking control

Depending on your credit score and the steps you want to take to boost it, you can come up with a plan to see how aggressively you want to improve it. The goal for most consumers is to get their credit score into the "good" range (670 - 739) or above.

Both FICO® and VantageScore 3.0 have the highest possible credit score of 850. There is no quick fix to improve your credit score, but you can take the above steps to improve it. For many people, buying a house is the first step toward realizing their American dream. If you plan to purchase a home, it will probably be the most significant investment you'll ever make. Raising your credit score as much as possible before applying for a mortgage can make a substantial difference in your pre-approval amount and the interest you pay on your mortgage.

If you're struggling to improve your credit score because you've been sued for debt, SoloSuit can help you take a stand and win in court.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

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"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather



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