Here’s the good news: you can still get a mortgage even if you have bad credit.
Bad credit affects more people than you would actually think. In fact, according to recent statistics, out of the 294 million consumers that can be scored, more than a quarter actually have bad credit. This means that you’re not alone and you can still get that house you’ve been dreaming of.
However, it will be more expensive to get a housing loan if you’re suffering from bad credit. There are plenty of things that you can do to increase your credit score and there are a lot of vendors that are still willing to cut you a little bit of slack. With the right mindset, a little patience and the proper tools in hand getting a considerably reasonable rate on a housing loan with a low score is definitely achievable.
What Is The Difference Between Good and Bad Credit?
If you have a credit score between 300-600, then you’re considered to have subprime or bad credit. Only around 20 percent of the population have super prime credit of more than 781.
Why is it More Expensive to Get a Loan with Bad Credit?
When mortgage companies take on a client with bad credit it is assumed that lending the client money is riskier than someone with a credit score in the higher 700s. In order, for them to mitigate their risks and as a form of payment for their assumed risk of the debtor defaulting, they have to charge higher rates.
So What Can I Do To Get My Loan?
Get your finances straight and start shopping around for a lender with the lowest rates for your credit score. At this point it would be a great idea to tell your potential lender about the possibility of your credit score being low. This is a good idea because it helps the lender adjust to your particular needs and it also allows them to be able to find the right products for you. By doing this you will be saving yourself time.
In case you get turned down for a loan that you are applying for, you have to remember that it is not the end of the world. Your credit might have probably not been the only reason that you were turned down. Be sure to politely ask the lender why you were turned down in the first place so that you will be able to make an honest to goodness assessment of your current situation and how you can be able to secure a loan at another institution.
There are many reasons why some lenders decline loans. According to the experts at crownmoneymanagement.com.au/mortgage-brokers/, failure to pay other debt or defaulting, a missing child support payment, having collection agencies after you, or simply asking for too much for your dream house, can be alternative reasons that can combine with your credit score and hurt your chances of securing a loan.
Do not, in any case, give up; there are always more lenders that will be willing to give you a shot. There is also the Federal Housing Administration loan that many people have built their houses on in the past that can offer you a way to get the money that you need for your house.
In any case, if you are still undecided if you are ready to purchase a house on credit, it would probably be fine time for you to start adjusting your finances in order to improve your score. A little perseverance goes a long way in getting the house you have always wanted!