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How To Avoid Becoming a First Time Home Buyer with Bad Credit

How To Avoid Becoming a First Time Home Buyer with Bad Credit

Tips for First Time Home Buyers

One of our biggest tips for first-time homebuyers is to do whatever you can to quickly increase your credit score to reduce your interest rate. After all, the difference between being a first time home buyer with bad credit and one with good credit could add up to tens of thousands of dollars in interest for the same 30-year loan.

Thankfully, unless you have a serious blemish like a foreclosure or bankruptcy on your record, there are some quick things you can do to repair your credit. Here are a few credit tips we think will help first time homebuyers achieve optimal mortgage terms:

Look at all of your credit reports CLOSELY

Credit reports are too often full of errors: such as incorrect credit limits, collections or late payments that were reported accidentally, or even don’t belong to you. Clearing up inaccuracies can have a big impact on your credit score.

Pay down as much credit card debt as you can

Paying down debt before applying for a mortgage is one of the best ways to avoid being a first time homebuyer with bad credit. If you don’t have the funds to pay down the debt right away, try taking a loan from a family member or friend for that purpose. It won’t technically reduce the amount of debt you have, but it will have a significant impact on your credit score.

Keep your credit cards open

You may be tempted to close credit card accounts you don’t use. Don’t. Closing a credit card can have a negative impact on your credit report. A credit card is much better off being open and unused. Or better yet, used for our next purpose.

Keep your credit cards well below their limit

Don’t let your cards approach their credit limit. It’s far better to have two cards well below their credit limit than one card hovering dangerously close to it.

Pay your bills on time

Late bill payments put dents in your credit score, so it’s important when you’re a first time homebuyer with bad credit to take whatever steps you have to take to make sure that your bills get in by their due date. If you’re behind, make arrangements to catch up.

Do your mortgage shopping efficiently

Every time your credit reports get run your credit score takes a hit, so it’s important to minimize the impact on your credit by getting your shopping done as quickly and efficiently as possible – with as few credit checks as possible.

At Blue Water Mortgage, we have experience finding loans for homeowners with all sorts of credit histories. As an independent brokerage, we have access to a variety of loan types, many of which cater to individuals with less-than-stellar credit histories. If you’re looking for your first home but have concerns about your credit score, contact us today.


Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.