How to Fix Credit Fast to Buy a House

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You may need to clean up your credit fast if you are buying a new home.
You may need to clean up your credit fast if you are buying a new home. (Image: home 3 image by Stacey Lynn Payne from <a href='http://www.fotolia.com'>Fotolia.com</a>)

For most people, the purchase of a home will be their largest investment and their credit rating the most important factor in how much they can afford to spend on their new homes. If your credit is poor, you may not even be eligible for a loan until you "clean it up." The lower your credit score, the higher your interest rate, resulting in higher payments. Since the amount of your monthly payment can only be a certain percentage of your total monthly income, that means the higher payments to creditors will result in having to settle on a less expensive home.

Things You'll Need

  • Telephone
  • Envelopes
  • Postage Stamps
  • Pen and paper/word processor and printer
  • Social Security Number

Obtain your credit report from Trans Union, Experian and Equifax. Check all three reports for accuracy. Call all companies which have listed information you believe is incorrect. Request the name of the person you are speaking with, explain that the information is incorrect and request he remove the information from your credit report. Document the name of the person and details of the conversation. Fill out a letter of dispute addressed to each credit reporting bureau listing the incorrect information, with details of how the information is incorrect, and mail it by certified mail to each bureau if the company refuses to correct the error. Send a copy of the letter to the involved company.

Call all remaining businesses listed on your credit report that show currently overdue, delinquent or unpaid accounts or liens. Make payment arrangements and ask how quickly they can show your account is current. Explain why the payment was late or unpaid and see if they are willing to remove the negative comments from your credit rating.

Check the balances on all your open credit card or revolving charge accounts. Pay them to below 50 percent of the credit limit. Resist applying for any new loans or credit, because to do this lenders and credit companies will run a credit check, and numerous inquiries on your credit report will lower your credit rating.

Keep all payments on any credit accounts and loans current. Pay all bills on time. Keep as much money as possible during this period in your bank account.

Tips & Warnings

  • Even if a business will not remove negative history reflecting past due payments, liens, etc., your credit rating drops each month when you have an unpaid or overdue account, so when you pay the account current, your credit rating begins to rise even if the history of your account still shows the account was overdue at one point.
  • Credit reporting bureaus must investigate all disputes within 30 days unless there is good reason to believe they are frivolous. You can find links to samples of and formats for dispute letters in the reference section below.
  • You can get one free credit report from each of the three credit reporting bureaus at least once per year. You can keep apprised of credit card fraud or identity theft by staggering your requests to each bureau. Ask for your free annual report about once every four months from one bureau at a time.
  • If you are denied credit on the basis of a credit report, the business denying the credit must tell you which credit reporting agency provided the negative report. You can get a free report from that credit bureau, if you request, within 60 days.
  • Even if the credit agencies rule against you in your dispute , you can send a letter of explanation to the credit agencies and, if requested, they must attach it to your credit report. For example, if you were 30 days late on a payment, but a close one passed away during that time period, you may want potential creditors to have that information for consideration.

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