Having bad credit may limit you from getting a mortgage, but that does not mean that your chances are long gone. You may still acquire one that will help you buy a house. However, you need to know the things that may help you in the process to increase your chances of getting approval.
In such a case, below are just a few tips and recommendations.
1. Gather All Your Credit Reports
In order to know how you can get a mortgage despite your bad credit, you need to know what your credit rating is like. And to do this, you need to collect all your credit reports.
As much as possible, you will get a copy of your credit score soon after applying for a mortgage. It is best that you gather all your credit reports from the three national credit bureaus. You can get this from each of them. This would help you compare your credit rating from the three sources, giving you a clearer idea if you are eligible for a mortgage.
2. Be Honest About Your Money Issues
The next thing you need to do is be honest about money issues with your mortgage lender. This way, you will be able to earn your lender's trust. In addition, you can also be honest with yourself, knowing that you have a problem and you want to solve it. Another thing is that you want to change your poor money habits.
3. Get a Co-Borrower
If you cannot gather all your credit reports or your credit score is very low, then it is a good idea to get a co-borrower, who will take out a mortgage with you in joint names.
With this type of mortgage, you will be able to apply for a mortgage even though you have bad credit. If you fail to pay your mortgage, your co-borrower will take responsibility for the whole amount.
4. Raise Your Deposit and Proceed to Undergo Credit Repair
If you want to take out a mortgage with your co-borrower, then you may also want to put up a larger amount as a deposit. This way, you can have access to a wider range of lenders due to lower Loan-To-Value-Ratio (LVR). You can even undertake credit repair in order to improve your credit rating.
You can establish good money habits, such as building up a good credit rating and managing your credit score. There are also some credit repair agencies you can hire to fix your credit report.
5. Have a Stable Income
If you have bad credit, then it is still possible to get mortgage approval. However, you need to have a stable income for this. So, it is a must for you to have a stable source of income, such as employment that pays you a regular paycheck. This way, you can easily pay for your monthly mortgages.
6. Avoid Making Multiple Applications for Mortgages
When you have a poor credit score, and you cannot get a mortgage approval, then it is important for you to avoid making several applications for mortgages just to check your eligibility. You can just submit your application once, wait for a few days, and get your answer right away. This is because numerous mortgage applications may also hinder your credit score, the fact that not many people are even aware of.
Conclusion
Getting a mortgage despite having bad credit is not impossible. However, you need to know your credit rating first and then make plans to improve it. You can do this by getting all your credit reports, being honest about your money issues, getting a co-borrower, raising your deposit, and by taking the necessary actions to improve your credit.
Take note of all our tips above, and you are on your way to getting that well-needed mortgage approval.
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