3 Steps to Help You Get A Mortgage When You Have A Poor Credit Score
Posted on: 14 May 2019
A poor credit score should not stop you from purchasing a home. If your credit score is not the greatest, you can still become a homeowner. You just need to know how to prepare for a mortgage application when your credit score is less than ideal.
#1 Start Paying Down Your Credit Cards
You cannot get rid of past missed payments on your credit score, but you can reduce your credit card balance. The balance you carry on your credit cards matters. Credit score companies look at the total amount of balance you could carry on your credit cards and compare that to how much credit you are actually carrying on your credit card. When you max out or carry a high balance on your credit cards, you bring your score down. By simply paying off or reducing the amount on your credit cards, you can help increase your score. This is something you can do relatively quickly, and it can help give your credit score a helpful boost.
#2 Start Saving Up Money
Next, you really need to start saving up money. You are going to want to make sure that you have a decent amount of money saved up. You will need money for the down payment and the closing costs. Since you have a poor credit score, you will need to save up more money than someone with a great credit score. When you have a high credit score, you can get away with saving up less for a down payment, but when you have a lower credit score, you should expect to have to put down closer to 20% for your deposit.
#3 Look Into Home Buying Programs
After that, you are going to want to look into home buying programs that are specifically designed for first-time home buyers or for people with poor credit scores. There are lots of programs that could help you secure a home loan.
Home loans offered through the Federal Housing Administration or FHA are usually a good place to start. With an FHA loan, they have more flexible qualifying criteria. You are able to qualify with a lower credit score than traditional loan programs, although there are some restrictions on the type of houses that you are able to purchase under one of these programs.
If you have a poor credit score and want to purchase a home, focus on actions that can quickly improve your credit score, such as paying down your credit cards and paying off your loans. Save up money, as you will need a lot for a down payment, and find a home buying program that offers more flexible lending terms.
For more information, contact a company that offers financing, like SWE Homes.
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