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Friday, January 31, 2014

Buying a Home with Bad Credit

Bad credit happens. The question is: How do we fix it?

There are a myriad of ads you see if you Google “Credit Repair,” all offering a quick fix to your credit issues if you would only pay them a low, low amount. However, there are no quick fixes, and there are no shortcuts.

There is, however, a simple and straight-forward approach you can take to put yourself in a better position, raise your credit score, and be able to purchase a home, within a reasonable amount of time, usually 6 months.

The first place you want to start is getting a copy of your credit report and credit score. offers this for free. If your score is at a 580 or above, you can get approved for a mortgage is certain circumstances through certain lenders.

If your score falls short of that, it is time to get to work. This means paying off collections, and starting to build positive credit history, which can be done simultaneously.

Your credit report will list all accounts that impact your credit. You will probably notice that the same collection company is servicing multiple collection accounts under your name. You can actually negotiate a settlement for all accounts under that company. The key is to have the cash in hand to pay them, and to get a statement from the collection agency stating that if you pay $X, they will consider accounts X, Y, and Z paid in full, and will report that to all credit bureaus.

Building positive credit is also important. Most lenders will want to see 3 active credit accounts in good standing, for about 6 months. The simplest way to do this is by:

·         Getting 2 secured credit cards from your bank or credit union. Basically, you will deposit a certain amount with the bank, and they will give you a credit card with a credit limit of the amount that you deposited. The more you are able to put down on the card, the better, as higher credit limits are looked more favorably upon. Whatever your credit limit is, do not let your balance on that card exceed 30% of the credit limit. Also, be sure to make payments on time every month.

·         Get a Credit Builder CD from BMO Harris. This is a fantastic product. Basically, you are purchasing a Certificate of Deposit (similar to a savings account) on credit. You pay them $45/month for 2 years, and at the end you have a $1000 CD that you can cash in. You can print off the application and information for this here:

Avery Garrett is a top Indianapolis Realtor serving the Indianapolis Metropolitan area from Coldwell Banker Kaiser. Avery is Premium 5 Star Agent and Top Contributor, and is a Member of the Metroplitan Indianapolis Board of Realtors. Contact Avery for a complimentary, no obligation, Market Analysis of your home at 317-721-2274, or SoldByAvery@gmail.comSee Avery's reviews and search for a home at

Avery is proud to help home sellers and home buyers in the following communities: Carmel, Fishers, Noblesville, Westfield, Cicero, Sheridan, Lebanon, Zionsville, Brownsburg, Avon, Danville, Plainfield, Mooresville, Camby, Greenwood, Bargersville, Martinsville, Franklin, Shelbyville, Southport, Beech Grove, New Palestine, Greenfield, Lawrence, Greensburg, Nashville and beyond.

1 comment:

  1. Great info Avery...I will look at the BMO Harris CD as a possible option for my clients as well moving forward. Thanks for sharing.