Getting a Mortgage when You Have Bad Credit

People with bad credit have trouble getting a mortgage, but if your credit needs work you can make changes in your life to improve your credit score. A better credit score will give you the chance at a mortgage and the chance at better financing terms and a lower interest rate.

If you want to get a mortgage and your credit isn't the best, you shouldn't give up. There are plenty of things you can do in order to improve your credit score and make you more likely to qualify for a mortgage on the house you want. The first thing you should do is get a copy of your credit report. There are three credit bureaus - TransUnion, Experian, and Equifax - and the reports they have on you might not match. Get a report from each of the bureaus. Compare them and look them over carefully.

If you find a mistake on any of your credit reports, contact the credit bureau and dispute it. You can't have legitimate items removed, but you can have mistakes corrected and items that don't belong to you removed from your credit report. A lot of people have mistakes on their credit reports, but they don't realize it because they don't check them often. You can get them free once a year.

In addition to correcting any problems you might find on your credit reports, another great way to get a mortgage with bad credit is to start paying your bills on time, every time. Paying them late lowers your credit score. It makes loaning you money more of a risk. If a bank or credit union will give you a mortgage with bad credit, the down payment requirement will often be higher, and so will the interest rate. These can make a big difference in whether you can get into the home, and in how much you can afford to borrow.

If you have serious credit problems, talking to a credit counseling service may be a good choice for you. These kinds of services can't just repair your credit if you've made mistakes, but they can work with your creditors to lower your payments and interest rates on the debt you already have. That can help you pay things off faster.

By paying the counseling service one payment each month that gets distributed to your creditors, your payments will be made on time. If you do this, check your credit reports frequently, and reduce your balances so you aren't 'maxed out' on your credit, you have a much better chance of getting that mortgage and becoming a homeowner.