Having bad credit can make a lot of things extremely difficult—especially getting a loan. When it comes to mortgage loans, many want-to-be homeowners with bad credit feel like they will never find a lender willing to give them a home loan. First Fidelis understands this concern, but we have a few tips for how you can secure a home loan even with bad credit.
Defining Bad Credit
What is “bad” credit? According to Experian, FICO scores under 579 are considered very poor. This means anyone with a credit score between 300 and 579 has bad credit. Credit scores between 580 and 669 are considered fair. The average credit score is only 675, which is considered too low to qualify for the best rates on conventional mortgages.
Obviously, the better the credit score, the more likely you will be to get a mortgage loan. But just because you have less than ideal credit, you shouldn’t feel like you can’t get a home loan.
Tips for Getting a Home Loan with Bad Credit
Having bad credit will have an impact on who will approve your loan application and how much interest you will be charged on the loan. But there are things you can do to help yourself secure a loan even with a bad credit score.
- Improve Your Credit Score
While this may seem like the obvious response, raising your credit score even a few points can make it more likely that you will receive a mortgage loan. You can quickly raise your credit score quite a bit if you follow some of the basic credit rules.
A few easy was to quickly improve your credit score include:
- Pay all bills on time
- Pay down debt balances
- Avoid taking out more credit
- Fix any errors on your credit report
- Keep credit utilization under 30 percent
- Save Up for a Large Down Payment
A large down payment will make you look better in the eyes of lenders. Save up for a little longer or try to find other ways to make extra money to have a large down payment available when you apply for your loans.
- See If You Are Eligible for FHA or VA Loans
Not everyone is eligible for government-backed mortgage loans, but you can always check to see if you would be a good candidate for one of these types of loans.
- Shop Around
Check out a variety of lenders before settling for a mortgage loan with incredibly high interest rates. You may want to look into credit unions or community banks because these institutions tend to be less rigid when it comes to credit scores. Additionally, credit unions are non-profit institutions that may be able to offer better terms for their customers.
To learn more about purchasing a home regardless of your credit history, contact First Fidelis today at 913-205-9978. We work with a variety of lenders to ensure that you will get the best possible rates on your home loan, and we work with buyers with all kinds of credit scores.