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Getting Your Way around Fair, Poor and Bad Credit


14 Dec Getting Your Way around Fair, Poor and Bad Credit

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Most experts will tell you that qualifying for a mortgage when you have bad credit is out of the question. That may be true for majority of people but it isn’t always the case. Even with fair, poor or bad credit, you can still get a loan. There are now lenders offering some mortgage options for people like you. Expect for getting approval to be difficult but it’s possible if you keep the following steps in mind:

Check your credit report

Most, if not all, lenders rely on credit scores to assess your qualification for a mortgage or a personal loan. Obviously, poor credit scores reflect negatively on your credit profile as the score indicates how you’ve dealt with your debt in the past. To know the real score about your credit, consumers are advised to request for a free credit report. The past 12 months of that report is especially important and because you have your report handy, your lender may even help you pinpoint steps that can help boost your credit score.

Try lenders who do not rely on credit scoring

When assessing loan applications lenders generally use credit scoring, a computer-based system that determines whether you’re a high risk borrower or not. Once you’re tagged a bad risk, most lenders will automatically decline your loan applications. You won’t even have a chance to explain your situation. To prevent outright rejection, you are better off trying it out with lenders that do not rely with credit scoring. Look for lenders who are willing to listen to your situation and at the same time help you with boosting your overall credit score.

Steer clear from mortgage insurance

When applying for a home loan, there are two types of approvals to think about. If you’re applying for a loan that is more than 80% of the property’s value, you need your lender’s approval first then your mortgage insurance provider. The mortgage insurer protects the lender in the event that you default on the loan. To increase your chances of approval, aim to cover at least 20% of the deposit. This way, you avoid the need for a mortgage insurer to assess your application before approval.


Work on improving your financial situation

You may have stumbled financially in the past but that doesn’t mean that your history should prevent you from obtaining a home loan today. If you can show your lender that you’ve worked on improving your credit score in the past months, you have a better chance of getting approved. The key is to demonstrate that you’re back on track financially. That means you’re paying your bills and other liabilities without delay.

Seek for professional help if necessary

If you think that your credit report is too complicated for you to decipher, don’t hesitate to seek for professional help. A good financial advisor should be able to help you figure out your financial situation. Together with your advisor, you can pave the way towards effectively boosting your credit score in the shortest time possible so you can get approved for a mortgage loan.

Check out bad credit special programs

If you’re among those who’ve been hit by the recent financial crisis and recession pretty badly, you may have a chance to qualify for a bad credit special program. If your bad credit score problem is not due to your personal mismanagement, you are advised to check special programs that can help you qualify for a home loan quickly. Make sure you have your credit report on hand before you seek out special programs suitable for your case.

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