Bad Credit Home Loans
The first step in the home buying process is understanding your credit report. So if you’re thinking about buying a home, you should be taking a look at your credit report as well. Your credit report is a record of all your credit transactions, whenever and wherever you’ve used credit to buy goods and services. When you apply for a mortgage, lenders will review your credit report because it’s an account of how you’ve managed your finances in the past – how much money you’ve borrowed and your history of paying it back.
If you’ve got bad credit, don’t worry too much, especially if you’re like so many millions of Americans that have been affected by the current economy. You may have made a few mistakes in terms of your payment history, there is still hope! There are many lenders that are willing to assist and can provide you with low down payment options to help you to refinance or purchase your first home. There are also several Government programs, including state and local housing programs in addition to VA loans if you have served in the Armed Forces, that are available that to assist you.
Your credit score has a big influence on the terms of the loan and the interest rate you receive –the higher your score, the lower your interest rate will be. You’ll want as many opportunities as you can get to keep your monthly payment down right? Let’s learn about how you can take steps to improve your score before you start the mortgage process so you can get the best terms possible.
No credit score lasts forever – it changes over time, so you can absolutely improve it. The first thing you should do, if you haven’t already, is obtain a copy of your credit report. In case you don’t know, a law has recently been passed allowing every American to get one free copy of their credit report per year. Contact one of the three major credit reporting agencies which are Equifax, TransUnion and Experian either by phone or online and request a copy as soon as possible.
Once you’ve received your report, give it a good look. There is time span that negative items are allowed to be on your report. If there’s anything on there that is past 7 years old, you have to dispute it and get it removed. Write a letter to the credit agency or dispute it online, but definitely take care of it as soon as possible. Also, credit reporting agencies make mistakes that can also damage your credit rating. If you see something wrong on your credit report, fix it immediately.
You’ll have to dispute any errors in writing with proof that either the account has been paid. In a case where its not even your account and the creditor has reported on you in error, call the number provided on the (usually) last page of your credit report where all of the creditors are listed and try to clear it up over the phone. Most creditors are willing to help you. If you tell them that you are trying to get a mortgage, they might even try to expedite the process. Credit agencies usually report changes every 30 days. You will be sent a ‘corrections’ page by the reporting company and any determinations or changes will be listed. If there are still errors, contact them again so they can fix it.
The process of ‘cleaning up’ your credit report can be time consuming but you will much better off in the long run if you do what you can to take care of it before you apply for a mortgage. Every positive revision to your credit report raises your score even if it’s only slightly. A minimum score of 600 is what you really want to achieve to get a decent home loan without having to come up with a large down payment. Stay on top of this process and once you’ve gotten what you can straightened out, make sure to keep an eye on your credit report to ensure what’s being reported is accurate and avoid any future issues with your score. Good Luck!
