When you start searching for a rent to own home with poor credit; first investigate your credit score. If your rating is poor, there are a number of specific things you can do as good practice to improve and build both your score and lenders’ attitude towards you while applying for a home loan.
Sign Up On Your Contract:
To get any credit for rental homes, you must get it on the contract. If it’s not on the contract, it’s unlikely you’ll get any credit.
Pay Your Bills On Time:
Always pay your bills on time. Late payments and collections can have a major impact on your credit Score.
Never Be Late Or Miss Your Payments:
For a better credit score, it is essential that the less time your payments are late and the longer that you pay your bills on time. Even if you’re struggling, try not to default or miss payments. Doing this once or twice could cause problems that can cost you for years. If it is hard for you to pay your bills on time, consider signing up for an automated bill payment service.
Repair Past Problems:
Credit scoring helps to predict your behavior. If you have a poor credit history it’s more difficult for lenders to lend you, you need to repair you credit score. One of the best ways to improve you score is by getting the right sort of credit card. By getting any kind of credit, and managing it perfectly, you can either build up a credit history from scratch, or improve your deficiencies.
Don’t Let A Third-Party Effect You Credit Score:
If you are ‘financially linked’ to someone on any loan, it can have an impact. Even a joint lease for apartment sharers can mean you are co-scored. If one colleague has a poor history, keep your finances rigidly separate, and it should maintain access to good credit for the other.
Do Your Rate Shopping Quickly:
You can avoid lowering your credit score by doing your rate shopping within a short period of time, such as 45 days.
Avoid The Rejection Spiral:
If you apply to get loan for rental house and you get rejected and this continues, immediately check the files are correct, otherwise you may mess up your score for an age as more applications mean more investigations, which complex the problem. When you get rejection first time, it can spoil your chances of getting further credit for rent to own because a search has been registered. It is better to check your file and call lenders you plan to apply to in advance.
Deal With Defaults:
Debt defaults can easily hamper applications to get new credit and if they’re genuine and fair are tough to deal with. Firstly check with the other agencies that the default is there too, and then try the following strategies, especially in case of unfair default.
- Complain to the financial institution if default is not fair.
- Negotiate with the lender in case of disputed defaults.
- Add a ‘Notice of Correction’ if the default’s justifiably unfair.