Whether a bad credit score results from a divorce, a period of unemployment or other adverse event, there are options for individuals saddled with a bad credit history and/or bad credit score who have given up or postponed purchasing a home. While a knowledgeable and well-resourced mortgage broker will have relationships with private lending groups and individuals who specialize in providing bad credit mortgages, there are preliminary steps that individuals can take to repair their credit scores.
Gail Vaz-Oxlade, a regular columnist for Yahoo! Canada Finance, has put together an insightful summary of steps to both establish a credit history, and to build and repair an existing credit history.
The five steps Ms. Vaz-Oxlade suggests for building a solid credit history are:
- Pay all bills on time – using pre-authorized payments if
possible. - Avoid applying for credit too often – as multiple credit
applications can be interpreted as a sign of financial trouble. - Charge regularly and pay off in full – using credit and paying
it off on time will help boost credit ratings. - Don’t over-expose yourself – as multiple credit cards or loans
can quickly become unmanageable. - Don’t use credit to pay off credit – robbing Peter to pay Paul,
by using cash advances on one card to pay minimum balances on another will
quickly spiral out of control.
While these steps are solid advice for
individuals trying to re-establish and build a good credit history, a bad
credit history need not necessarily preclude home ownership.
bank lender.Consulting an experienced and knowledgeable
mortgage broker with
access to a network of private lenders may open the door to home ownership,
even as an individual with a bad credit history – whether due to a divorce,
employment layoff or other adverse event – works to restore his or her credit
scores.
