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How to Fix Your Bad Credit in 6 Easy Steps

If a bad credit score is keeping you from applying for a conventional loan, do not lose hope! You may qualify for a reverse mortgage in AZ, so long as you have enough equity. Seniors can apply for the reverse mortgage Arizona program and use the money to finance their retirement. This includes traveling, paying medical bills, clear outstanding home mortgages, and anything they wish to spend the money on. 

However, rather than wait to apply for a reverse mortgage in Arizona, you can work on credit score improvement to help qualify for a mortgage.  In this post, I will take you through six tips to help you fix your bad credit. 

Step 1: Start by inquiring your current credit report  

What is your current credit score? You can visit the credit bureau to check your credit score. Alternatively, you can check the credit score online for free. 

What is a credit report and what is the information that is shown on the credit report?

The credit report is a compilation of the information showing how a person handles their credit and pays their bills. Ideally, the credit report shows information relating to:

  • How much debt you have accumulated
  • The information on how you pay your bills
  • Current address and place of work
  • Information on past bankruptcy and lawsuit judgments
  • Records on foreclosure and past recoveries

Therefore, checking the credit report will let you understand why you have a poor credit rating. 

Step 2: Dispute any Erroneous Entries 

Do not be surprised to discover that some information on your credit report is erroneous. For instance, a past debt you have fully repaid could be entered erroneously resulting in a bad credit score. Maybe it is another person’s debt captured as yours. 

Scrutinize the credit report to find any errors and raise alarms to have the errors rectified. 

At this stage, the credit score may be a few points up, after the errors have been eliminated. 

Step 3: Pay Outstanding Debts and Get a Clearance Certificate

Upon disputing any erroneous entries, chances are that you still have some outstanding debts you need to clear up. Follow-up with the concerned parties to have the debts paid in full. 

This could mean cutting down on daily expenses to afford the money that can be used to repay the debts. Alternatively, you can dispose of some assets so that you can repay the amount owed to other persons. 

Paying off your debts may seem like a short-term plan to improve your current credit score but it can also help greatly in the long run. 

Step 4: Keep paying all your bills on time

Paying bills when due is another important step when it comes to credit repair. Remember that paying debts before the due date could earn you extra points which goes into improving your credit score. 

Step 5: Cut up your Credit Cards

Another tip to help you fix bad credit is cutting up your credit cards. Remove the temptation of increasing your credit card balance before repaying the existing debts.  This helps you get out of the debt cycle. 

As tempting as it may be to increase your credit card balance to survive hard economic times, it takes a toll on your overall credit score. Therefore, we recommend that you only use your credit card after you have repaid the debt in full.

Step 6: Focus on Increasing the Balance on your Savings Account 

Although the checking and savings account balances are not reflected on your credit report, your savings can help you in case of an emergency, keeping you from borrowing another loan as an emergency mitigation measure. 

Therefore, a savings account becomes an important aspect when looking for ways to improve the credit score. 

Can you get Reverse Mortgage in Arizona with a Poor Credit Score?

 You may still qualify to get a reverse mortgage with a bad credit score. Your reverse mortgage AZ lender will request a credit report. This is because the credit report shows your record based on past bills and debts. 

A bad credit score is not necessarily a basis to deny you access to Reverse Mortgage Arizona programs. If the credit score is not satisfactory, it is a call to the lenders to examine your finances further. The reverse mortgage lender will evaluate any late repayments or overdue accounts to find out whether there are any issues causing this to occur. 

The credit score report is an important document that details how satisfactory a mortgage borrower performed in the past.

If you have any questions about improving your credit score or have questions about getting a reverse mortgage, call us today!

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