How to Get a Bad Credit Mortgage: Your 2018 Guide

Bruno Simpson Last Updated Aug 28, 2018 (0) comment

bad credit mortgage

Have you been dreaming about buying a house? Think your bad credit will get in the way? We’ve all been there.

Missing payments or collections will lower your credit score. Yet, you can get a bad credit mortgage to buy that home in no time. Not sure how to get that loan to buy your house today?

We’ve you covered. Here are the steps you should follow to get a mortgage with bad credit:

1. Pull Your Credit Reports

FHA loans minimum credit requirements is a 500 credit score. Before contacting your lender, you must find out your credit score. It’s recommended that you pull your credit report from all three major credit reporting agencies.

Experian, TransUnion, and Equifax provide one free credit report a year. It’s important that you check all three because not all lenders use the same reports.

Also, your credit scores might be different for each agency. Not all of them use the same information or report at the same time.

2. Fix Any Errors on Your Reports

If you notice an error in your credit reports, you should dispute it with the credit report agency. It might take some time to get it fixed.

But, your scores will improve after they fix the errors. Having a better credit score can help you secure a better interest rate with your lender.

3. Increase Your Credit Scores as Much as You Can

Before contacting your lender, you should improve your credit scores. Your payment history and balances owed are the factors that influence your scores the most. You should consider negotiating with your creditor if there are any collections listed on your report.

Paying them won’t improve your score. But, your score will increase if your creditor erases the collection from your payment history. Also, you should consider lowering your balances.

Credit reporting agencies use your credit utilization ratio to calculate your score. If you lower some of your balances, your ratio for those accounts will decrease. Lowering your balances, fixing any errors and removing collections are the best methods to improve your credit score in no time.

4. Look for the Right Lender

It’s recommended that you shop around before submitting your mortgage loan application. Not all lenders provide mortgages with bad credit.

FHA loans have low credit score requirements but, the lender sets their own terms. Look for a lender that can work with you while providing competitive rates and terms.

5. Get Pre-Approval from Your Lender

Once you find the right lender, you should get your loan pre-approved. The loan officer will ask for documents such as income information. Also, the lender will pull your credit.

They’ll provide a pre-approval letter based on your income and credit. This letter will say the loan programs, amount and interest rates you qualify for.

Can You Buy Your Dream Home Using a Bad Credit Mortgage?

Yes, you can buy your dream home today using a bad credit mortgage. Your credit won’t get in the way of making your dream come true. Before shopping around for your home, it’s important that you research and cover your bases.

It might take some time to get your credit scores and documents. But, once you receive your pre-approval letter, you can start shopping around and buy your house in no time.

Want to make sure you qualify for your mortgage with bad credit? Check out our blog post to learn more.

Bruno Simpson

Contributor at FHA Loan Search
Mr. Simpson is based in the San Francisco Bay Area and has nearly a decade of experience in credit score and reports analysis, loan origination and the home loan application process.

He is an experienced presenter on affordable housing topics including FHA, VA, and conventional home loan programs.
Bruno Simpson

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