If you have a low credit score, then you may run into some difficulties in trying to gather financing for a home loan. Remember that even though you may have bad credit, that there are steps you can take that will help you land a home loan, which is suitable for your financial situation. When lenders see that you have bad credit, then they place more emphasis on the other qualifying factors that can determine whether or not you will be approved. Knowing what those other qualifying factors are, can help you in the long run secure financing.
Get a Down Payment
First, if you have poor credit but are able to come up with 2%-20% down, then that can affect your ability to get approved for a mortgage and/or assist you in getting a lower interest rate on your loan. If that means waiting a few extra months to save for a larger down payment, then that will save you money in the long run.
Stay At Your Job For Two Years
Second, know that lenders are going to analyze your income and job history, if you have poor credit. Because you have bad credit, lenders are going to want to make sure that you can afford the minimum payments as well as the cost of living. The longer that you have been at your job the better. When applying for a mortgage it’s beneficial if you can show that you have worked somewhere consecutively for a minimum of two years.
Pay Bills On Time
Lenders are going to want to look closely at your payment history over the last one to two years. Specifically, lenders will look at the history of your auto, utility and credit card payments. Most likely if you have poor credit, and are able to show that you have been consistently on time with your payments, and then they may over look your poor credit history.
Finally, it never hurts to find other ways to improve your credit. Just because you have poor credit does not mean that you will never get financing for a home.
Author: C.L. Haehl
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