What to Do After Your Credit Has Gone Bad
The importance of your Credit Rating
Your Credit history gives mortgage providers information on your financial past and how well you have paid your debts and bills. It is matter of fact that life can be much unexpected and can effect your Credit Score in a negative way. Perhaps you have been hit hard by this economic downturn or maybe an illness or even just plain old mismanagement has left you with a series of late payments on your credit. Let’s look at what to do to repair you Credit Score after such an event.
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Regular late payments
All types of credit providers report to the credit agencies about you and your repayment history. Cell phones, credit cards, student loans, vehicle or personal loans, lines of credit, and of course your mortgage all show up on your Credit Report. Often the descent into bruised credit starts by missing a payment here and there. If you had a rough patch like this, the best thing you can do is catch up ASAP. Lenders will want to see 2 years of perfect repayment on at least 2 credit facilities. It is imperative that you not have another late payment on anything including your cell phone.
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Orderly payment of debts (OPD)
This program is entered into voluntarily by people who need further help. These agencies will meet with you to assess your situation and determine a repayment plan with your creditors. Interest rates are negotiated down and you are set up on a repayment plan to pay your creditors every cent you owe based on your income. You need to have 2 credit facilities reporting pristine for 2 years once the OPD reports as complete. At that point many lenders will consider you for mainstream lending.
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Bankruptcy
In this scenario, you have gone through the formal bankruptcy process. Your debt obligations were negotiated down to a fraction of what they were and you have paid out that amount as per your agreement. Two years after you show as formally discharged with 2 years of established credit on 2 credit facilities you will once again be eligible for mainstream lending. Without those criteria you may find yourself paying a higher rate for a mortgage or other loan.
Our mortgage professionals will assist you in finding the right options to achieve your financial goals and help you to make the best decision. Remember that the most important reason to use a Client First Mortgage Solutions Mortgage Broker is because the bank employee works for the bank while we work for you. Contact us today!
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