Bad Credit Mortgage Market Tightens

By Kelly Wingard
Mortgage Credit Problems Columnist

If you've been listening to the news lately, you know it's going to get a lot tougher to obtain a mortgage or refinance a home if you have bad credit. Notice, I said tougher, not impossible. With sustained effort to improve your poor credit performance, you may still be able to obtain a mortgage loan. But with the current financial climate, you'll have to work harder than ever to convince mortgage lenders you are an acceptable risk.

Beware of Bad Credit Repair Scams

You've heard the old adage "Physician heal thyself." Well, when it comes to bad credit, you're your own doctor--no one can repair your credit but you. Beware of snake-oil peddlers who try to convince you otherwise. The Federal Trade Commission bluntly warns consumers about companies who charge fees to clean up credit reports, stating: "After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money."

If your trying to refinance or get a new mortgage, you're better off using your money to pay your debts in a timely manner, rather than on scam artists who claim they can repair your bad credit. Consistently paying your bills on time is one of the best ways to improve your credit score!

Dispute Inaccurate Information

Legally, you can't remove accurate information from your credit report. But you can dispute inaccurate or incomplete information at no cost. The Fair Credit Reporting Act gives you the right to request a free credit report if a company takes a negative action against you as a result of bad credit. You must request this information within 60 days of receiving a notice informing you that you have been denied credit, insurance, or employment. This notice will include information on how to contact the relevant consumer reporting agency.

Source
Federal Trade Commission

About the Author
Kelly Wingard is a freelance writer and a 25-year veteran tax preparer. She is a regular contributor to the University of Illinois Tax School training manual for tax professionals.

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