When you are applying for a mortgage loan, one of the most important things that lending companies will consider is your credit history. If you have a bad credit history, lending companies might not consider you as a good borrower. They will consider you as a risk and might not grant you your loan. Do not lose hope though as you can still get a loan despite your bad credit history. How? Read on.
Check your Credit Report
You can get a free credit report from the Federal Trade Commission. Make sure that all the details in your report are accurate. In case there are errors, you should write a letter to the lending company and explain the error. You should also provide document/s that will support your update.
Prove that You have a Steady Source of Income
With a bad credit history, it will be hard for you to qualify for a loan. However, you can make it a bit easier if you can show the lending company that you have a steady source of income. Of course, you will need to show them your proofs of income so that they will believe you.
A steady source of income can convince the company that you can pay your monthly repayments. This can give you a good chance of being qualified.
Pay Your Other Debts
The ratio of your debt to your income is also a huge factor when obtaining a mortgage loan. Even if you have a steady source of income when you have a high debt ratio, your chances of qualifying for a loan is still low. Therefore, when you can, pay all your obligations and other loans. Showing that you don’t have an outstanding debt can make your chances higher even with a bad credit history.
Pay a Higher Down Payment
If you can, pay as high down payment as you can. This will show the lending company that you are serious in your loan and that you are capable of paying. Of course, when you will pay a high down payment, your balance will be less and thus, the company will no longer need to worry as with your steady income, you can surely pay it.
Search for Someone to Become your Co-Signee
If you know someone with a good credit history such as a family member or a friend, ask him to become your co-signee. Having someone with good credit to sign your contract too will ensure the lending company that you will be responsible in paying your loans. If you fail to pay your loan, your co-signee will become responsible. With this, it can be difficult to convince someone to become a co-signee.
Getting a mortgage is hard, but it is harder when you have a bad credit history. These tips can help you get a mortgage loan even with your low credit score. You can also contact us at Global Mortgage and we will be happy to offer you a hand.