But I Have Bad Credit

Poor credit does not necessarily prevent you from purchasing or refinancing.  In fact, given a little time, you may be able to raise your credit score (FICO score) if you are below the normal guidelines for a loan.

Here are a few tips to maintain a healthy credit score:

1. Pay down credit cards.  Yes, pay off your fixed loans as well like your car, student loans, etc., but first pay off your revolving lines of credit.  Try not to use more than 30% of your available credit line.
2. Make on-time payments.  Every time you are 30 or more days late on a payment, it is typically reported by your creditors.  On-time payments will help raise your credit score.
3. Avoid Collections.  Getting a collection reported on your credit report can have very negative effects, so at least make a token payment to stay out of collections.
4. Don't Apply For New Credit Lines.  This may indicate that your current credit lines are not enough and you are short of cash.
5. Verify Credit Report.  Ensure all credit cards are reporting the correct credit limit, that all creditors are reporting on your report, and that there are no errors in general.  If you do find something that needs to be removed, you can contact the credit reporting agency to dispute that item.

Another major factor to getting a loan is your debt to income ratio (DTI).  DTI is calculated with the following formula:

In general, your DTI should be less than 45%.  The are two primary ways to improve your ratio:

1. Increase your monthly income.
2. Reduce your monthly debts on revolving credit and loans.

For most people it's easier to reduce your monthly debts than it is to raise your income.  Here are a few tips to help reduce your monthly debt payments:

1. Sell/refinance your car to eliminate or reduce that payment.
2. Consolidating your loans/credit cards into one loan may result in a lower monthly payment. (We do not recommend increasing your interest rate for the sole purpose of lowering your monthly minimum payments.)