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Want to Repair Your Credit to Buy a Home: A 12-Month Plan You Can Follow

Most of us long for and try hard to own a home.  We consider this idealized place our shelter, especially in bad times. If you are looking to buy a home soon, one important number you will have to bring up to snuff is your credit score. Bad credit nearly always creates many complications when you are trying to buy something as big as a house. But don’t worry as we have a 12-month plan that can improve your credit score so you can buy your dream home.


Jan – Mar (1st Quarter)


Figure Out Where You Stand and Devise A Plan


Spend the first few months of the year to create a plan. You have to check all your credit reports meticulously. You can get all your reports for free, once every year, by visiting www.annualcreditreport.com  or you can call 1-877-322-8228. Note that a credit score from 700 to 740 is considered “good credit”, depending on the method used.  Review the list of outstanding debts, credit cards, and major purchases. After checking your credit reports, make a comprehensive list of any errors you discover. Write a letter to any of the 3 credit reporting bureaus Experian, Equifax, or TransUnion to dispute the errors.  Note that late or missed payments can really hurt your credit score. It is better to set up automatic minimum payments for a few or all of your monthly obligations. Also, reduce your credit card balances as it is the best way to enhance your credit score. Pay your credit cards down; however, don’t cancel them.


Apr – Jun (2nd Quarter)


Monitor Your Progress and Establish New Credit  


Keep checking your credit reports on a regular basis. Sometimes, it can be helpful to establish new and positive credit accounts while you are working toward improving your credit. This step can be especially worth considering in case you’ve little to no current credit. You may need to reestablish your credit by opening a new account.  Keep paying your bills on time. This is because no single factor influences your credit score as much as your history of timely payments. 


Jul – Sept (3rd Quarter)


Settle Default Debts and Use a Credit Builder Loan


During this quarter go through all 3 of your credit reports. Also, take a look at your latest credit scores to determine if your initiatives have made any difference.  It is better to pay off derogatory accounts, like tax liens, collections, or judgments. Although this step may not improve your credit score, not paying them could be a mistake, which can hurt your credit scores. You may even have to face some unpleasant consequences, like wage garnishment.  A credit-builder loan has one important purpose: to help you enhance your credit profile. You are likely to find this type of loan at a community bank or credit union. 


Oct – Dec (4th Quarter)


Track Your Progress and Plan for a New Home


In the last quarter of your credit improvement year, it is still imperative to review your progress. So, you should re-check your 3 credit reports as well as credit scores. It is a good habit to routinely check your credit and you should do it in the future too.  Monitoring the fluctuations in your credit score every few months could help you in understanding how well you are managing your credit. Also, continue to follow through on the aforementioned plans to eliminate your credit card debt as well as establish positive credit management practices on all your current accounts. 


Less than stellar credit scores do not mean you’ll never own a home. Make the effort to clean up all your credit reports and stay positive. Owning a home is definitely a dream worth achieving.