Time always heals everything. But correcting negative marks on your credit such as delinquencies, foreclosures, bankruptcies, and collections can take many years to be erased. Although, there are a few steps that a borrower can take to clean up their credit immediately. For one, it is important to pay down credit card balances to at least 30% of the total balance. High credit card balances raise red flags to underwriters. Second, too much revolving debt is detrimental to qualifying for a loan. Start managing your debt months ahead of time before buying. Third, try to consolidate debt and close troublesome accounts. If the borrower can get on a pay-off plan months in advance, the lending process will be that much easier. Fourth, have emergency funds in place just in case you lose your job. Emergency funding can help cover monthly expenditures, rather than having to be late on any payments. Fifth, do not have your credit pulled on a regular basis. Limiting your inquiries will keep your credit score from going down when it is pulled more than once outside a 14 day period. Lastly, it is important to note that a $5 collection has the same effect on your credit as a $5,000 collection. Just because you have a simple $14 collection on a movie return, it does not matter, your credit score will be damaged the same as if you had an outstanding collection of $14,000 on a car loan.

The use of credit scoring has changed over the years, and although credit scores do not factor income, race, religion, and ethnic background there is potential unfairness. Some consumer advocates worry that some disadvantaged groups might suffer because people who have low incomes or who live in minority neighborhoods might have less access to mainstream lenders, and thus have worse credit scores. As a result, the lenders these populations use . finance companies and sub-prime lenders who might not report to credit bureaus, making it harder to build credit history (Your Credit Score, Weston 11). It is important to cover all bases; borrowers must do their homework to make sure their financial future is moving in the right direction.

Remember, not all credit reports are 100% accurate. Their may be inaccuracies, so double check everything that has been reported. In some cases regarding these errors the credit scores went up nearly 100 points, so these corrections can make a world of difference and determine whether or not you can qualify for buying a home. Anyways, treat your credit the same as you would your mortgage, not only do they coincide with one another but your credit score holds the keys to your financial future.