So you want to buy a house, but your credit isn’t quite there? This is the case with many people, and it pains you watching that money get thrown away in rent. The good news is you can change that, but it can take some time and effort.
If you open your browser and search for credit repair you are inundated with companies offering to help you for a large upfront fee or monthly fees. DON’T DO IT. Everything you read below will help improve your credit score the same way the credit repair companies do, but for FREE. Depending on your score and the negatives hurting your score, you could be ready to buy a home in as little 6-12 months.
In many cases you can also settle old debts for less than you owe, again without paying someone a fee to do it. Credit agencies show your credit history for 7 years, if you have old collections close to 7 years ago, let those fall off because if you pay on them it becomes a recent item again, which then reports for another 7 years. Debt settlement works best for debts that have not been paid AT ALL on in a long time. Here are some tips (let’s assume the old debt is $1,000):
If you can finally get them to agree to a settlement DO NOT GIVE THEM MONEY OVER THE PHONE. Tell them they MUST mail you a letter with your name, address, and account number on it stating that they will accept your $500 as payment in full. Only when you have this letter do you send them the money by CERTIFIED CHECK only. If you give them a credit card number or mail a check you open yourself to the possibility of them taking more money from your account then agreed on since they have your account number.
Additional Credit Building Tips. I’ve talked about ways to deal with collections, now let’s look at other ways you can also build your credit.