Taking Time to Conquer Bad Credit

(August 31) -- Mortgage loans usually are rejected when applicants have excessive debt, insufficient income, or a history of tardy payments or credit write-offs. However, prospective homebuyers who take a year or two to reverse those problems will find lenders much more receptive to their future applications, despite those past problems.

Experts say the first course of action when denied a mortgage is to retrieve a credit report and review it thoroughly. According to Gerald Beach of the nonprofit Credit Counselors of Northern Virginia, getting credit back into good standing and saving money for a down payment should be the top priorities for these consumers. That may mean working with a mortgage lender to find out the criteria for buying a home and then working toward that goal and/or consulting with a credit counselor to develop a debt-management plan.

While declaring bankruptcy might seem the easiest answer for some, Beach and others warn that this is the least favorable solution, as this kind of credit blemish will remain on the record for seven years.

Source: Washington Times (08/31/01); Murray, Deanna M.