A low credit score or other credit problems doesn’t necessarily mean you cannot qualify for a home loan. It is possible to obtain a low credit score home loan in the present market. You can also take some steps to improve your credit score and credit profile before you apply for a home loan. These same steps are used by mortgage professionals, credit repair professionals and legal professionals to help their clients qualify for a low credit score home loan.
Qualify for a Low Credit Score Home Loan By Improving Your Credit Profile
1. Review all 3 credit reports and contact the credit bureaus if there are any incorrect items. This is one of the biggest steps you can take to improve your credit score. This process usually results in one and possibly two actions by the credit bureaus. Upon receiving your inquiry about incorrect items the credit bureaus will often remove the incorrect items temporarily while they complete their investigation. This temporary removal will usually create a temporary increase in your credit score. If the investigation determines there are incorrect items they will be removed permanently which will result in a long-term credit score increase.
2. Make sure all regular monthly bills are paid on time. This includes credit cards, student loans, other loans, car payments, insurance, cell phone, etc. Paying these bills on time will gradually increase your credit score.
3. Pay down debt if possible. Making extra payments toward your credit card balances and other debt can also result in an increased credit score. It is still important to continue using your credit cards but paying down the balances is generally positive in the eyes of the credit bureau and home lenders.
4. Avoid new debts. Taking on new debt can be helpful once you have had time to start repaying the debt. If you are applying for a low credit score home loan you should avoid taking out new debts. There are two reasons: 1) taking on new debt can affect your debt to income ratio which can prevent you from qualifying for a low credit score home loan and 2) applying for new credit results in a credit inquiry which will usually lower your credit score in the short term. Following these steps can result in a fast increase to your credit score. This is especially helpful if you are applying for a home loan in the short-term. If you have more time you may be able to incorporate additional steps to increase your credit score. Get started with your low credit score home loan today. Complete our pre-approval questions below and our home loan agents will contact you.