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Five Myths About Bad Credit
Author David Schneider | May 23,2007
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Jason and Sara applied for a mortgage program that their bank offered. They submitted all of the required documentation, they made enough money to qualify for the money they were requesting and they had a good mortgage payment history. However, when the bank processed their loan application they discovered that the couple's combined credit rating was just under their minimum acceptable credit rate for a prime rate mortgage. The couple received a letter from the bank that told them that the bank had denied their loan application based on their credit score. Their loan officer tucked a special note into the envelope with the rejection letter. It recommended that the couple try for a bad credit mortgage. The couple couldn't believe that they had “bad credit” and that they would need to use a “bad credit mortgage” in order to get into their new home. However, they decided to work with a mortgage broker to find a bad credit mortgage.
Five Myths about Bad Credit: Myth 1
There are many myths about bad credit that people believe. The first one is that bad credit always refers to people with a credit score less than 620, that have high credit card balances and that have gone into collection on most of their credit accounts. This myth is untrue. When you are shopping for a mortgage, bad credit usually refers to credit scores that are under 680. This includes people who have credit scores on the borderline between fair and excellent credit.
Five Myths about Bad Credit: Myth 2
Old debts have the same weight as new debts is the second myth about bad credit. This is untrue. Credit accounts on your credit report lose weight as they age. This means that older accounts and balances have less bearing on your credit score then newer accounts and balances do.
Five Myths about Bad Credit: Myth 3
The third myth about bad credit is that you have to make a big credit mistake for it to show up on your credit report. This is not true. If you pay your utility bill late, or miss a payment, this information is on your credit report. Also missing a $10 minimum credit card payment has the same damaging effect as missing a $200 minimum credit card payment.
Five Myths about Bad Credit: Myth 4
The fourth myth about bad credit is that you need to close your credit accounts after you pay them off to improve your credit score. This is not true. Actually closing your accounts can lower your credit score. If you don't want to use your credit card after you pay off its balance, leave the account open and destroy the card.
Five Myths about Bad Credit: Myth 5
The fifth myth about bad credit is that there is nothing you can do about it once you have it. This myth is not true. There are many simple things that you can do to improve your credit rate. First, you can improve your credit rating by paying your credit card bills on time every month. Next, you should try to whittle down your credit card balances as quickly as possible. Finally, you can use the equity in your home to pay off your credit card debt by taking out a home equity loan.
QuoteMatch.com Can Help Your Get Things Right
If you are trying to find a way out from under a lot of credit debt before it hurts your credit rating, then you may want to consider taking out a home equity loan. If this sounds like an option you want to consider, then fill out a mortgage request form at QuoteMatch.com today. They will help pair you with lenders who can help you select a home equity product that is right for you. Go to QuoteMatch.com today. |
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