Raise Your Credit For The Back to Work Mortgage Loan

A “Back to Work” home mortgage requires satisfactory credit; are you eligible?

The “Back to Work” mortgage loan has been in full swing since August of last year. Millions of Americans are now eligible to apply for a new home mortgage loan if they have faced an extenuating circumstance as a result of the housing market crash of 2008.

A “Back to Work” home mortgage requires satisfactory credit, which takes a significant hit after an economic event. Credit scores below 500 are not allowed in the program, but borrowers with no credit score remain eligible. Having satisfactory credit proves you are good risk to lending agencies, meaning you have a higher probability of repaying your mortgage on time — exactly what agencies are looking for. Use the following tips to guide your credit score in “Back to Work’s” direction.

Make payments on time
Although it sounds simple, the most defining factor in your credit score is whether your payments are made on time or not. The Back to Work program requires a 12-month credit history that is clear of late housing, installment debt payments, delinquency and other derogatory credit issues. Set up payment reminders with your online banking system. The reminder will send you a text message or e-mail notifying when your payment is due.

Don’t pollute your credit report
Instead of using a bunch of different cards for small amounts, have a go-to credit card. If you have multiple credit cards with small balances, pay them off. Your score will consider how many different cards have balances. However, don’t panic and cancel all of your cards — that can hurt your score, too.

Keep good debt
Many borrowers believe that old debt appearing on their credit report diminishes their score; this is actually false. If you have debt that you handled well and paid back on time, keep it on your credit report. The longer the history of good debt, the better your credit score is. This proves to lenders that you are a good risk that will be able to make payments on time. Negative debts will disappear from your credit report after seven years, but adding a history of good debt is not harmful.

Don’t obsess over the number
Making quick significant changes in your credit usage usually indicates risky behavior. Lending agencies want to know that you will be able to repay your Back to Work mortgage in stable increments. If you are denied credit, the lender is required by law to show you the credit report it used to make its decision (Dodd-Frank Wall Street Reform and Consumer Protection Act). Be responsible for your bills and don’t obsess over your credit score. If you make smart financial decisions, the number will revive itself. If you remain concerned, speak with a credit expert on how to handle your specific credit history.