Ball and Chain & HouseThings happen—life doesn’t always go the way you planned. You may have worked really hard for several years to obtain a solid credit score only to have unplanned circumstances knock it back down. Just because you’ve had a string of bad luck though shouldn’t mean you can never buy a home. There are ways to work around this as long as you’re willing to put some effort forth.

Obtain a Current Credit Report

The first thing you need is a current copy of your credit report. Right away, you’ll have a list of everyone that has charge-offs and bad debt complaints against you. If these are correct, then you have to start working on correcting them. However, if any of these are incorrect, you need to dispute them right away—with all three credit bureaus. Once an investigation is opened into a particular debt, they will determine if it can be removed from your report or not.

Those debts that you do indeed owe are the place to begin. Start by contacting each of these agencies to set up a payment plan. It doesn’t benefit them to have the debt sitting there either, so they will more than likely be happy to work with you. Talk to them about a minimum payment you can afford and then work out a timeline to do this. If you set these plans up and stick to them, they can start reporting positively to the credit agencies. Of course, your real estate agent will also have a copy of this report to review, and could make some recommendations.

Use Credit Cards Responsibly

Make sure you’re not using your credit cards to the maximum limits. It does not look good when you do this because the credit agencies assume you’re not a responsible consumer. Just because you have access to $10,000 of credit doesn’t mean you should use all of it. The most you should carry at any one time is 1/3 of the credit available to you. This leaves you availability in case of emergencies and shows the credit providers you know how to manage money.

Don’t go out and apply for any credit cards at this time if you already owe previous providers. It will only count against you if they deny your application, making it harder to recover your previous credit score. Wait until your current financial problems are resolved before you open up any new lines of credit.

It does take time, but it is possible to recover from a low credit score. As long as you’re willing to meet these financial obligations, small bits at a time, you can regain the ground you lost. There are also professionals who are willing to sit down and go through the process with you. In fact, they may be able to set up payment plans that would be unavailable if you called the credit companies yourself.

Either way, don’t let bad credit keep you from owning a home. It is able to be corrected and you can have a piece of real estate to call your own. Follow the procedures, stick to the payment arrangements and watch your credit score begin to creep back up to the positive side of things.

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This is filed under Home Buying.


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