Earlier I started answering a question by one of our members here at Families.Com. She asked:
“We have really bad credit, should we find a realtor that will help us fix/rebuild our credit before buying a house. Or should we try to fix it ourselves?”
We are now in the second part of answering this question. If you missed the first part, you can read it by clicking here: Buying a Home with Bad Credit.
Now, let us continue.
Begin to work on repairing your credit. As much as you can, pay off old debts and loans. Start with the smallest ones first, so you can cross them off of your list.
The next step is to reduce the credit card debt. The average person carries more than $8,000 in credit card debt. Negotiate with your credit card companies for a lower rate and make sure to pay more than the minimums each month to bring that balance down. Keep only one or two credit cards and close out all of those store cards that are so freely given out. They count toward your available credit.
Make a commitment to avoid any new debt. As one of our members pointed out in the forums, buying a car before buying a house is not a good thing. If you need a car, look into a used car that can be purchased with cash. You can always upgrade it later, after you buy your house. Scale down your purchases. After all, do you really want to move more stuff?
Create a budget and stick with it. Live as frugally as possible. There are so many ways to reduce your expenses and live inexpensively. Think about how every penny you save will be gifted back to you in the form of your new home. Eat out less, carpool, clip coupons, visit the library instead of buying books and DVDs, etc. Bringing your own lunch to work can save you $800 or more a year. You can find so many great ideas for saving money in the Frugal Blog. Go check it out.
Next up we’ll talk about the ways that will make you more likely to be able to purchase that home even with bad credit.
Mary Ann Romans writes about everything related to saving money in the Frugal Blog, technology in the Computing Blog, and creating a home in the Home Blog. You can read more of her articles by clicking here.
Related Articles:
Do It Yourself: Staging Your Home to Sell
What to Do When You Get A Low Offer
Calculate the Real Cost of a Purchase