If you are considering buying a home in Los Angeles it is important to know what your credit history is going to show before you start the process. Why? Because, depending on your score, and if there are any negative hits on your report, your interest rate is going to rise and you may also not get approved for a loan.
There are three credit reporting agencies (CRA) that track your credit: Trans Union, Equifax and Experian, and you will need to run your credit through all three. You are entitled by law to a free report every year. There are also ways to get the reports for free, but be careful how you navigate the sites so that you don’t end up paying for something you didn’t expect.
What is a good credit score?
Anything over 760 is excellent, and you don’t have to worry about improving it.
Under 700 you will definitely need to look at repairing your credit.
Anything in between, if you do have any negative items it would be a good idea to work on clearing them.
How to repair your credit score.
- Start by looking for any errors, such as incorrect reporting of late payments. Report it to the CRA(s) who will contact the creditor to remove it. They have 30 days to investigate error. If the CRA does not hear back in 30 days they will remove it.
- If there is a collection against you, pay it off. A late payment is better than leaving it unpaid.
- Make sure to stay on top of your debt by making payments on time.
- Pay down debt. It’s not so much about your total debt, but how much you have on each card.
- Don’t open any new credit lines and don’t close any existing accounts.
The higher your credit score, the better your interest rate. So even if you do qualify for a mortgage it may be worth waiting for your disputes to be resolved in order to lower that interest rate.
Don’t pay attention to those ads that offer credit repair. You will be paying for something you can well do yourself.
Check out the FTC site on how to repair credit yourself.
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