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People with bad credit that are looking to get a home mortgage loan or to refinance their existing home mortgage loan, know how difficult of a job it can be to try and get approved. Adverse credit history can mean a little more legwork to get an approval for a mortgage loan, and especially to get a decent interest rate.
Most mortgage brokers will tell you that if they can't help you, no one can. That is simply not true. Every mortgage broker or mortgage lender has access to very different lending programs. A program that may be impossible for one broker can be very possible for another broker. Some mortgage brokers have access to lending companies that specialize in home mortgage loans for people with less than perfect credit that have more lenient qualifications than other sub-prime lenders do.
The key to getting approved for a home mortgage loan with poor or bad credit is persistence.
Apply with online mortgage brokers that will submit your application to multiple lenders, so that you will receive at least 4 lender offers from each application that you submit. These companies will submit your application to usually hundreds of mortgage lenders that can help you with a refinance, purchase, second mortgage or home equity loan and then remit the 4 best offers available to you. These online mortgage broker services can help people in almost every state from Florida to California.
The best thing about this process is that most of these mortgage brokers won't even pull your credit when you apply. That means that there is no risk to you for trying it out. Usually when you have started to work with a specific mortgage lender, that is when they will ask if they can pull your credit report. You may already know that multiple inquiries on your credit report can drop your credit score slightly, and if you have bad credit to begin with, you are going to want that score to be as high as possible.
Talk with many different mortgage loan brokers, if you can, have one mortgage loan broker pull your credit and then ask him/her what your credit score is. Then, go to all the other lenders you want to apply with and tell them your situation, with your credit score, income and down payment information. Have them give you some estimates of what they can do before they ever pull your credit.
There are many things you can do to boost your credit score, but before you let your bad credit keep you from getting into a home, be persistent and make sure you have applied with or talked with as many different mortgage lenders or mortgage service companies as you can. If you can apply online, that is a fast, easy way to apply with many mortgage lenders and get responses quickly.
Well sure you made a few mistakes in the past, perhaps a few late payments, and of course there is some debt that you are aware of. But then again, doesn't everyone? You certainly didn't believe that your credit report history was bad enough to not qualify for a credit card or loan, even at a higher interest rate.
Let me tell you a secret, many people have absolutely no idea what is on their credit report! Your credit report has, in the past, been something not readily available to you, or an expensive item to attain. Many people are just not aware that your credit history can determine your financial activities for your entire life. This is becoming more prevalent as credit awareness and education is deemed necessary. So it is important to always be apprised as to what is really on your credit report!
There can be either two items on your credit report: accurate or inaccurate. Credit providers may have reported inaccurate information on your report! Mistakes happen that you may not even be aware of. A move, changed phone number, lost mail, open credit cards from 15 years ago that you simply didn't know existed, and other easily overlooked or forgotten items do happen, more than one might think. Hey, who has time to keep track of every single financial item when life, as we know it (busy, fast paced) is hardly ever forgiving?
Many people get down on themselves for having a bad credit score. But this is not necessary! It is not a reflection of who you are. Really. You may have never been educated on how to handle your finances or extenuating circumstances may have greatly effected your credit. So in order to stay on top of your credit history, and not be blind sided by an embarrassing, unexpected rejection, check your credit report!
Credit reports are no longer some far off document that is hard to get a hold of. After all, it is YOUR credit report, right? Shouldn't you have easy access to it? Well somebody else thought you should too, and the Fair Credit Report Act (FCRA) was enacted just for this reason. Here are the terms:
• Every person is entitled to a free credit report if a credit company takes an adverse action against you, or if your application for credit or insurance is denied.
• You are entitled to a free credit report if you are unemployed and plan to get a job in 60 days, are on welfare, or if your report is inaccurate because of fraud including identity theft.
• Equifax, Experian and Transunion, all nationwide consumer reporting companies, are required to provide you with a free copy of your credit report every 12 months.
Now there is no excuse for you not to keep on top of your very important credit report. All you have to do is go to www.annualcreditreport.com and request your free report! Or, you can call 1-877-322-8228. Always check your credit report before you apply for any mortgage loan or line of credit.
So you have your credit report, what next? Evaluate each item as accurate or inaccurate. Which items can you clear quickly by simply closing a card or calling a creditor and paying off an old debt? If there are inaccurate items, you must make a dispute in writing with supporting information. This means copies of any documents that support your claim. You must send this information to both the credit consumer company as well as the credit provider.
If your dispute is accepted and changes are made, the company must send you the changes in writing as well as send you a new credit report with the inaccurate information removed. The credit provider may not make the same claim against you again. If you find inaccurate information and get it fixed, then your credit report will be better, and another step towards getting that lower mortgage rate has been made!
If there are negative items that are accurate on your report, then you must take action towards fixing them! If you are not sure what to do, consult a financial advisor at your bank who can help you set up a repayment plan, consolidate debt if need be, or even investigate debt forgiveness.
Negative items will stay on the credit report up to seven years, but if you make an effort to begin paying back debts, and show you are serious about qualifying for a mortgage loan, then you are yet closer to proving to a mortgage lender that you are both willing and able to pay back a loan. And these two things: willingness and ability are exactly what a lender evaluates when considering a person for a loan.
Fixing your credit of accurate negative items takes personal effort and time. However, fixing inaccurate information that can greatly increase your credit score, can be done fairly quickly. If you are serious about getting a mortgage loan, or even a better mortgage loan to save you money, consult your credit report before you take any steps at all!
By understanding where you stand, you can either choose to go forward and find a mortgage loan that is within your limits, or repair your credit before making a move. Even if you are not considering a loan or line of credit, always stay on top of your credit history because you never know when a better score can save you time, money, and huge headaches!