Mortgage Refinancing - If You Have a Blemished Credit Report

If you are in the process of refinancing your mortgage, qualifying for the best interest rate is probably high on your list of priorities. Most Americans have blemished credit reports in one-way or another; one in three Americans has poor credit all together. Having a blemish on your credit does not mean you have to settle for a bad interest rate. Cleaning up your credit is an important part of qualifying for the best mortgage refinance loan. Here is what you need to know to fine tune your credit rating.

Before you do anything else you need to make sure your credit records are accurate. Request copies of your credit reports and go over them with a fine toothcomb for errors. If you find errors you will need to dispute the errors with the creditor responsible for placing it there.

When correcting inaccuracies on a credit report, send the correct information in a letter to the credit-reporting bureau, requesting a return receipt. Be sure to include documentation. The Fair Credit Reporting Act indicates that it takes about 30 days to change a credit report.

Avoid credit repair agencies that charge a fee to improve your score by removing negative, but accurate, information from your credit report. No one can force credit bureaus or lenders to remove accurate information from a credit report. Credit repair companies often take your money without delivering what they promise.

Once you are certain that your credit records are correct, you need to concentrate on your repayment history. A large portion of your credit score is derived from your repayment history. Late payments have a negative impact on this score. You need to have at least six months of on time payments on your credit record before you start shopping for a new mortgage.

Bring credit card balances down to less than 30% of the credit limit. Do not get rid of credit cards and lump all your debt into one card. Having a low balance on several cards is better than having a balance of more than 30% of the available credit on one card.