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Bad Credit
Home Loan
There's a train of thought that runs something like this: 'It's okay
to have bad credit if it's only a couple of hundred dollars. If it's
not a lot it'll be overlooked, right?' Wrong. The simple fact is
that debt that's gone unpaid past an acceptable point of time is not
just debt, it's bad credit.
There was a time when debt and bad credit wouldn't hurt you. Then
came the 1980's, Reaganomics, accountability. Ah, the 70's. Well,
open the window, disperse the smoke clouds, and get over it. You
want a house, right? Or maybe even refinancing? The rules are
basicly the same either way, with just a little leeway for those who
already own their own home.
You don't want a history lesson you say? You barely even remember
the 70's and could give a rat's tail about all of that? Fair enough.
The nuts and bolts of it all, however, is that you want to come out
of this debt you've found yourself in. The first step out of the
muck is to tell yourself the truth: you're a consumer with poor
spending habits, and that has to change: no more unnecessary
purchases.
It is just this sort of expenditure that is at the heart of debt. It
is a truly sad affair to consider that numerous unpaid (or slowly
paid) purchases can limit a great purchase like that of a home. A
waterbed, mag wheels, new tiles on the kitchen floor, a canopied
bed, all fine possessions, but if you have to put them into someone
else's home -that is, a rented property, then they're really not
that sweet, are they? Ask yourself: just how important was having
the latest flat screen T.V. to replace last year's flat screen?
Priorities. These will get you through bad credit in favor of that
mortgage loan. Once your mindset and habits have been modified, then
it's time to buckle down and pay your dues. You want a mortgage loan
despite bad credit. You need your credit report. This isn't one, but
three reports, some similar, some different from each other,
depending upon your spending habits of the past and of the
information-collecting standards of "the big three" -that is, the
three big credit reporting agencies.
These three reporting companies commonly go by the names of Equifax,
Experian, and Trans Union, though their actual names are bit more
involved. They cover the debt of everyone that buys anything on
credit within the borders of the U.S. -anywhere. This includes even
Hawaii, Alaska, and little Puerto Rico.
Bad credit? Mortgage loan? The next step is to send for a credit
report from each of these companies. Two of them will charge you for
the service-about $8.00 each, with the third company giving out a
free report. When you receive your reports, go over them with a
fine-toothed comb. Ensure that every debt that you're said to have
is of the true amount that you owe (if, in fact, you do owe
anything). If a mistake has been made, don't waste a single minute:
bad credit will eat away at your finances -in interest alone, if not
lost sleep.
As for fears of beauracratic jumbling, fear not: The Big Three were
sued in 2000 for 2.5 million dollars in penalties by the Federal
Trade Commission for being less than helpful in rectifying mistakes
on credit reports.
Lastly, while waiting for your credit reports to arrive, talk with a
loan officer at a bank -or better, at a credit union (which
generally offer more competitive interest rates and, let's face it,
better services all-around). S/he will put you on track to that
mighty juggernaut of good credit called escrow, a not unworthy
adventure in itself. But that is another story for another time. For
now, put aside that bad credit, get that mortgage loan!
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