Bad Credit Scores: How To Get A Mortgage

Don't be afraid if you have poor credit or fear that you will lose your mortgage loan application. Even if you have a poor credit score, you may still be eligible for a mortgage. It will depend on several factors, so speak to a lender to determine if you are eligible for a loan. Many lenders will talk with you about your eligibility and offer no obligation to approve a loan.

What Credit Score Do I Need To Buy A House?

Let's First Look At FICO's Credit Score Ranges:

Extraordinary Credit: 800 or more

Excellent Credit: 740 - 800

Good Credit: 670-740

Fair Credit: 580-670

Poor Credit: below 580

There are still ways to buy a home even if your credit score is low. Mortgages will also have credit score requirements. The type of loan you are applying for will determine the minimum credit score required. Conventional loans require a minimum credit score of 620. The FHA loan program permits credit scores as high as 580. If you have low credit, an FHA loan may be the best option. Remember that lenders might have other requirements depending on your income or down payment.

A co-borrower is another option for prospective homeowners with poor credit.

Resolving And Preventing Credit Card Problems

Bad credit does not mean you are doomed. Lenders may still be able to approve you for a loan if your credit score isn't too low. However, you may have to pay higher interest rates and fees if you default or fail to repay the loan. It is in your best interests to improve your credit score to be eligible for a lower interest rate. This can help you save thousands over the long term.

Mortgage lenders consider the "age," dollar amount, and payment history for each credit line. This means that opening new accounts, increasing your balances, not paying your bills on time, or even closing them all, can negatively impact your credit score. Conversely, your credit score can be positively affected by changing just one aspect of your spending habits.

You can improve your credit score by paying off your debts on time, paying your bills on schedule, and disputing any errors in your credit report. Unfortunately, there are also ways to lower your credit score.

• Do not close an existing account to delete it from your report. It doesn't work.

• Do not open too many credit cards in a short time.

• It doesn't take too much time to compare interest rates. Every time you apply for credit, lenders will pull your credit report. There is usually a grace period of around 30 days for applicants who are looking at different lenders to find a lower interest rate.

Even if your credit history has been in a downward spiral, it is possible to inform a potential lender that you may have some bad credit. This will help you save time and allow him or her to look at other loans.

Why Were You Turned Down For A Loan?

Ask your lender if you still have trouble getting a loan. For example, a loan may not be granted to you because of bad credit. You may also be denied a loan for your home because of:

• Credit cards that are too long: Lenders will be suspicious if you fail to pay or exceed your credit limit.

• Lenders will reconsider if you fail to pay an existing or previous loan.

• Bankruptcy: Have you filed for bankruptcy within the last seven years? It is possible that you will have difficulty getting a loan.

• Lenders will check your tax payment records for overdue taxes.

• Judgments: A judgment against you could affect your credit score if you are convicted of delinquent child support payments.

• Collection agencies: Lenders can tell if collection agencies are pursuing you.

• Don't go too far: It is possible to seek a loan beyond what you can afford.