Should I Refinance My Mortgage Or Repair My Credit First?

credit repair mortgageThis question tends to come up a lot nowadays as many US homeowners have seen a dip in their credit score over the years following the great economic crisis of 2008. While the economy continues to recover and grow from the depths of 2008, 2009, and 2010, the recovery of average individual credit scores have yet to recover to the same degree. Therefore how do you determine whether or not to refinance your mortgage or fix your credit score first?

Mortgage Refinance vs. Credit Repair

In the simplest of terms, repairing your credit would be the most beneficial in improving your financial health and locking in maximum savings from a refinanced mortgage. With a FICO score below 620, you’ll find it fairly difficult to find lenders that will take on a mortgage with you. In the case that you did find a willing lender, the added fees and higher interest rates would likely make the savings achieved from a refi much lower than expected.

Plain and simple, the higher your credit score, the more options you’ll have and the greater your potential savings will be. As a general rule of thumb, credit scores of 740 and higher will likely get you the most attractive refinance interest rate. Since getting there may take a while, consider an FHA mortgage which has no added fees for lower scores, so you can get access to the best rates with a FICO near 600.

How Do I Repair My Credit?

Well there really are two primary routes to go when looking into credit repair: 1) purchasing a credit repair service or 2) do-it-yourself credit repair. Both methods can work for you but one requires time and the other requires money.

If time is of the essence and you decide to go the paid route, here’s what you can expect from a quality paid credit repair service:

Bureau Challenges – They go through your entire report and challenge the inaccurate records.
Creditor Interventions – They negotiate with creditors to ensure that the records are accurate.
InquiryAssist – They confirm whether all hard inquiries are accurate, removing those that aren’t.
Cease & Desist Letters – uses C&D letters to get debt collectors to follow the law and stop hounding you.

Editor’s Note: You can check out a free, no obligation credit repair consultation here to quickly determine how you can specifically benefit from a credit repair.

These steps typically take several weeks to several months to resolve your credit issues which is why many people prefer to have a company working on behalf of your situation. However, if you prefer to go the free route when it comes to credit repair, check our article highlighting the 5 Simple Credit Score Hacks You Need To Know.

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