Credit Repair Cloud Blog | How to Start a Credit Repair Business

How to Save Thousands of Dollars on Mortgages with Credit Repair

Written by Daniel Rosen | December 19, 2023

Are you ready to unlock the secrets of homeownership through credit repair? On this week’s podcast, I'm sharing industry secrets that will not only help you or your clients secure a dream home, but can save you thousands of dollars on a mortgage.

Today, we're unlocking the secrets of credit repair for homeownership. With interest rates high and the real estate market more competitive than ever, a good credit score is the golden ticket to not only buy your dream home but also to save THOUSANDS of dollars on your mortgage.

When you start utilizing the credit repair strategies that we talk about on this show, and you start attracting new clients, many of your most enthusiastic leads will be interested in credit repair as a step along their home-buying journey.

And you, Credit Hero, are in a position to be a MASSIVE help to them on that journey as their credit score can impact the interest rates they get, potentially saving them thousands of dollars over the life of their loan.

HERE'S HOW THIS RELATES TO US…

In your work as a Credit Hero, understanding the role of credit in homeownership is crucial. Whether you're a first-time homebuyer yourself or guiding clients through the process, It’s very important to know how credit scores, payment history, and debt-to-income ratios impact your ability to get a mortgage. 

The credit score is not just a number; it's a reflection of financial habits and trustworthiness.  And a higher score will lead to better loan terms for a mortgage!

HERE'S THE THING TO REMEMBER…

Lenders don’t just focus on credit scores. They also look into credit reports and payment histories. Patterns of on-time payments, low credit utilization rates, and a diverse mix of credit accounts can really improve a mortgage application.

Debt-to-Income Ratio – which we’ll call DTI – is another crucial factor in mortgage approvals. It measures the percentage of a person's gross monthly income that goes towards paying debts. The lower the DTI, the more favorably lenders view the application. A DTI below 36% is generally preferred, with no more than 28% of that debt going towards the mortgage.

HERE'S WHY THIS IS IMPORTANT…

A good credit score and a healthy financial profile are essential for anyone who wants to buy a home. A higher credit score can bring you lower interest rates, making the mortgage more affordable and can save you tens or hundreds of thousands of dollars over the life of the loan. 
By taking proactive steps to improve credit, like paying off debts and reducing credit card usage, your or your clients can improve the chances of qualifying for a lower rate mortgage.

HERE’S WHAT YOU NEED TO KNOW:

Mortgage options can be complex, and this is where your expertise as a Credit Hero becomes invaluable. Each type of mortgage has its own credit score requirements and nuances. Let’s get into them.

Conventional Mortgages: Typically, these require a credit score of 620 or higher. A higher credit score not only increases the likelihood of approval but also can result in much better interest rates and loan terms.

FHA Loans: Designed for lower-income borrowers, FHA loans can be available for those with credit scores as low as 500. However, for scores between 500 and 579, a higher down payment may be required. Scores above 580 can enjoy lower down payments.

VA Loans: Aimed at veterans and active military members, VA loans have more lenient credit requirements and often do not require a down payment or private mortgage insurance. A great credit score can still get you a better interest rate.

USDA Loans: These are ideal for buyers in rural areas and require no down payment. While they don't specify a minimum credit score, lenders typically prefer a score of 640 or higher.

Now here are a few helpful reminders to improve your odds of getting an approval at at the very best interest rate:

Periodically review your credit reports for errors. Even small inaccuracies can impact credit scores. Correcting these errors can be a quick way to improve your creditworthiness.
Remember that preparing for a mortgage is a long-term process. Developing good financial habits, like regular savings and budget management, can greatly improve your mortgage application when the time comes.

So how, exactly, can you improve your Credit Scores and lower the debt to income ratio? Here are 5 easy steps:

1- Pay Down Your Debts: Reducing outstanding debt, especially high-interest credit card debt, can improve both your credit scores and your debt to income ratio.

2- Avoid Applying For Any New Credit: Prior to a mortgage application, don’t apply for anything at all, as that inquiry will be a ding on your credit score, and don’t take on  any new debts, as this can increase your debt to income ratio.

3- Increase Income: While not always immediately possible, if you can increase your income in any way, this can improve your debt to income ration. So if you can explore new avenues for income, such as seeking a promotion or taking on side gigs, now is the time to do it.

4- Set Payment Reminders: Your bill payments must be on time. So set up automatic payments or calendar reminders to avoid any missed payments.

5- Check your credit reports for accuracy: 79% of all credit reports contain errors, so that means most credit reports have errors. 

Use a tool like Credit Repair Cloud, to help yourself or your clients review their credit reports from all three major bureaus (Equifax, Experian and TransUnion) and review them very carefully. Look for incorrect information, likes wrongly reported late payments or fraudulent accounts that you don't recognize, as these can significantly impact credit scores. Credit Repair Cloud makes it very easy find and dispute any inaccuracies. 

With your help correcting errors, you’ll see an improvement in the credit scores, which will in turn improve the success of their mortgage application.
By educating and guiding your clients with these industry secrets, you play an important role in their journey towards homeownership. Remember, effective credit management is about more than just numbers; it's about unlocking life-changing opportunities.

HERE’S MY FINAL POINT…

As a Credit Hero, you have the power to turn home-buying dreams into a reality. By sharing these secrets and guiding your clients, you're not just repairing credit, you're building futures. Remember, every step you take in improving a client's credit is a step closer to their dream home and a better financial future.



I'LL END BY SAYING

If you still need a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Sign up here for a Free Trial!

And if you'd like to change lives and grow your Credit Repair business, check out our Credit Hero Challenge!

It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!

So take care, Credit Hero!

And Keep Changing Lives!

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