Struggling With Home Loans For Bad Credit? Follow These Simple Steps.
Bad credit doesn't have to limit your dreams of owning your own home. Here are some simple steps to help you achieve your goal of buying a home:
Look at your credit report.
It may seem like a no-brainer, but knowing precisely what your credit score and looking through your credit history is an essential first step in getting a home loan. Your credit score will determine what type of home loan you receive. It's important to look through your credit report carefully to see what problems there are and see if there are any items you can work on to start improving your credit and rebuilding your credit. It's also essential to contest any incorrect information on your report. Challenge it with the credit agency where you received your report. Everyone qualifies for a free credit report every year from the top three credit agencies, so you have no excuse not to get this part done. There are a lot of free content available and even classes on how to correctly read your credit report, to help you check it's accuracy and learn how to dispute any discrepancies there may be.
Go to Credit Counseling
There are several free credit counseling programs to help rebuild your credit after financial pitfalls. Many of these programs are put on through the Department of Housing and Urban Development (HUD). They offer a lot of excellent courses for potential homebuyers with poor credit, including homebuyer education workshops. These types of counseling programs help homebuyers before they purchase so they can recognize what their financial responsibilities will be with a mortgage, and create financial goals to achieve their goal of homeownership eventually. Many of these counseling services can help you develop an economic strategy to improve your credit score and help you qualify for home loans.
Start Rebuilding Your Credit.
Several strategies come into play on fixing your credit and rebuilding your FICO score. Once you look through your credit report and determine what is hurting your credit score the most, start working on a solution to fix it. Most improvements will be contingent on your unique credit history. For example, if your credit has taken a hit for excessive debt start by paying that high debt down. If you have items sent to collections, make a financial strategy to pay that debt off. If you don't have many credit accounts open, consider opening a new loan and diversifying your credit history.
Research What Types of Loans You Qualify For
Conventional loans require pretty strict FICO scores, so research what other options you have available to you. If you have time to build your credit score up, you may choose to wait and build your credit up to reach that traditional goal. If you would like to purchase a home more quickly, however, there are a lot of excellent options available for people with less-than-amazing credit. FHA home loans, for example, are available for people with credit scores in the upper 500s, with only 3.5% down payment. Research what options you qualify for, and you may be surprised how quickly your dream home can become yours.