Ann Bennett - KELLER WILLIAMS REALTY / Metropolitan



Posted by Ann Bennett on 3/29/2018

If you have seen your latest credit score and feel like youíre less than financially fit, donít fret. Thereís plenty of reasons why people end up with bad credit. Thereís also plenty of things that you can do to amend and work with your bad credit. 


The Factors


Mortgage lenders look at a variety of factors when it comes to your credit and determining if youíre ready for a home loan. These include:


  • Age of credit
  • Payment history
  • Amount of credit debt


If you have opened new accounts frequently or ran up credit card balances without paying them down, these behaviors could negatively affect your credit score. 


Changing Your Habits


Just changing one of these bad habits can help your credit score in a positive way. This also means that a bad credit score doesnít equal not being able to get a home loan. Your home loan may just come at a higher price. 


What If Youíre Turned Down For A Loan?


You can ask your lender why youíre unable to get a loan. Some possible reasons that youíre getting rejected:


  • Missed credit card payments
  • Failure to pay a loan
  • Bankruptcy
  • Overdue taxes
  • Seeking a loan outside of what you can afford
  • Legal judgements
  • Collection agencies


If you have defaulted on a loan, missed payments or filed for bankruptcy, chances are that youíll have trouble securing a home loan. Other factors that can affect your credit score include negative legal judgements that have affected your credit, or having a collection agency after you. 


How To Fix It


If you have bad credit, itís not the end of the world. Itís possible that lenders can give you a loan if your credit score isnít too low. You could, however, face higher interest rates as a penalty for a low credit score. This is due to the fact that youíre more likely to default on a loan based on your risk factors. 


You can improve your credit score by:


Keeping existing accounts open

Refraining from opening new accounts

Trying not to approach too many lenders to find the right interest rate. Every time you get a credit check, it affects your score. 


Finding A Loan


Signs of bad credit can take awhile to disappear from your credit report. Sometimes, you have the opportunity to explain to lenders what these factors are in detail so you can secure the loan. There are even mortgage companies that assist you through the loan process to give you a boost in getting the loan.


FHA Loans


FHA loans are a great program option especially for people with bad credit. These loans offer low down payment options and have lower credit score standards. FHA loans have been helping people to secure their first homes since 1934.


If you have bad credit, the dream of home ownership is still possible. If youíre early in the process, get to work and keep that credit score up so that when you head out to apply for a loan, youíll be able to secure it.         




Categories: credit score   home loans   loans