With the number of consumer-friendly loans being advertised in the UK daily, doesn’t it seem odd that your home is at risk of going up in collateral value when you need it the most to buy one of the things you have been dreaming about? No matter what your hopes and desires are about, there may be some groundwork to lay the groundwork for that dream home as well as how to finance your day-to-day desires.
It is generally accepted that the hardest part about buying a home is finding a good loan, and it is certainly true if you are new to home buying or simply have had your eye on a home for a while and have focussed solely on getting a home loan. When it comes to home purchasing, mostly, we can only participate in a “gift visit” once when the time comes. What that means is as we look at homes, we choose one of our favorites, take a good look at it, like it, like it, love it, and don’t even want to move – then in a few weeks or so, we look at another one, and before long, we have 3 or 4 to choose from.
The result can get quite muddled or complicated, depending on how long you have owned your home, what state of residence you live in, how much of mortgage do you have, etc.
This pattern has been recognized by lenders, and everyone knows that having a poor credit history is one of the determining factors on whether or not you will get a loan.
So, what can you do about your bad credit history, and if you can make any sort of change, is it possible? Here are a few ideas. You need to get a copy of your credit report. It will be from Equifax or Experian, and these are the most used, so rather than trying to find your credit rating by scratch, it makes sense to get a copy of your credit file to find out what it says about you.
Once you have the report, you need to spend time notifying any negative comments on it that you see to be inaccurate. By writing to your lender or whoever is in charge of lending you money, asking them to remove any of these comments if it is an error – you can have any comments removed, immediately improving your credit score.
One of the other areas that aren’t so obvious at first to people until they get to the home and look around at all the new things for sale is how the interest rate is calculated. Many people will find out that their mortgage rates are artificially inflated just because they have bad credit. By having a clear understanding of how your mortgage rate is calculated, you will be better equipped to deal with it. This is obvious, and the first step in getting a better interest rate is knowing exactly what elements make up your rate.
Just looking at the interest rate alone can make a big difference to your ability to afford the home you want. If you are paying an artificially high rate, it could take you years to pay off the loan in full due to the increased balance of interest.
Also, be aware of what your mortgage is based on, and how it might affect your ability to get a loan. It is possible to refinance to a more favorable interest rate in the future or to get a separate loan to pay it off.
Now, don’t get me wrong, refinancing or any other action like that is not the only way to fix your credit rating. But, if you can understand how your credit rating works, understanding your credit reports, and knowing how to work with them for the better, you can have a massive impact on your long-term finances.
For instance, say you want to buy a house in 3 years’ time at an interest rate of 7.5%. It will cost you $ allegations. $60,000 will be paid out over five years. See the difference? That’s $000 right there – make that, another $240,000. That could be gone in a couple of years or saved altogether in the first couple of years.
Another thing is that your credit rating may not actually work in your favor if you are trying to get a loan or credit card. And that is real, no joke. Here is what I mean – say you went to fill out a loan application, and to make sure they did not count you as any less financially responsible than you are, they asked for your credit history – well that, again, may affect their view of you, because they may not see you as, say, an excellent driver or someone who works for cash, and therefore is less likely to repay them as you would.
Again, a car payment, which maybe you used for a while, in fact, almost an ongoing requirement for a new car, will most likely show up as a debt against you.
How to Get a Better Interest Rate
