Home equity loans and damaged credit

Your credit report is a record of every significant financial transaction you have ever had, itemizing bankruptcies, judgments, home loans, charge card or other revolving accounts, and other significant monetary debts or bills. Your credit report come with your FICO, or credit score , a number between 300 and 850 that represents your overall financial health in the loan business. Your credit score, also known as a FICO score, is a distillation of your entire debt history and your ability to obtain funding for anything today, tomorrow or next year depends upon having a healthy credit score.

When you apply for a loan or mortgage, the lender is going to want to see a copy of your credit report so that they may decide if you are a good risk for the loan. The mechanism of acquiring a mortgage is a complicated one, and there are a number of procedures involved.

What if your credit record or financial history is poor? Can poor credit be fixed? Can companies that pledge to to repair bad credit actually help?

No organization can "repair" your credit overnight, whether you pay them or not. The idea of credit repair is a commonly advertised myth. There is no simple way to change the information the credit agencies have on file for you. Any company that promises to repair poor credit is simply after your money. Your credit record is maintained by Equifax, Experian and Trans Union three separate corporations that each keep accurate records of your financial transactions. While no one can repair your credit for you, you can do it on your own if you are patient and willing.
 

The best thing that you can do to clear up your record is to begin, right now, to repay your bills and to pay them promptly. If you occasionally pay late or if you have defaulted on debts, this will weigh heavily on your FICO figure. The only way to increase your FICO score is to establish that you are capable of repaying loans promptly. One third of the FICO figure is associated with your payment history; that is, whether or not you have a report of paying your bills promptly. It may take a year or two to repair tarnished credit, but soon, you will have additional credit options available to you.

The only way to repair the problem of too much debt is to reduce your balances. If you have five credit cards with thousands of dollars in caps and they are all at their limits, you have a problem with debt ratio. One third of your score is determined by the ratio of existing debt to available credit. You don't have to pay your financial obligations down completely, but you must drastically reduce the amount you owe. Should you eradicate a charge card debt, do not cancel the account; just stop using the credit card so that your debt ratio doesn't increase again.

As you pay off your debts, check your credit history for mistakes or criminal activity, such as identity theft. It is not easy cleaning up your credit report. You can access a credit report for no charge three times a year; you should do so. Repairing tarnished credit takes some time and determination, but it can be accomplished and it is worth your time if you want to acquire a home.