If your dream is to own your own home, but you unfortunately have bad credit, there's still hope out there for you. Although you'll have more trouble securing a loan than someone with good credit, with a little education on credit scores and how they affect mortgage rates, you'll be better armed to point your research in the right direction.
You're going to have to be ready to get out there and sift through numerous bad credit lenders to find one that will offer you a reasonable deal. You're also going to have to prepare yourself to hand any prospective lender some serious documentation to sway them in your favor.
It's surprising to see how many people try getting a loan without knowing what their credit score is. In the case of mortgage loan, the score most widely used by lenders is the FICO score, named after Fair Isaac & Company, which is the company that calculates the score. Your credit score summarizes your credit history in one number and that number guides lenders in their loan approval decisions.
All financial institutions do not use exactly the same version of the FICO score. Specific examples of this are the credit card, insurance, and auto loan industries which all have their own little variation of the credit score that specifically meets their needs. Yet they all share the characteristic that says that the higher your score, the better a deal you'll be eligible for.
In case you didn't know it or it slipped out of your mind, you have three credit scores, not one. Because all three credit bureaus work independently, and because there's no legislation requiring that credit information be reported to all three bureaus, your credit file will vary from one to the other. The only way to get as accurate a snapshot of your credit profile as possible is to order your credit score from each one of them.
It's common knowledge that a sizable percentage of credit reports contain errors. When you receive yours, most experts recommend that you go through it with a fine-toothed comb in order to make sure that there are no mistakes there that make your file look worse than it really is. Any mistake you find should be signaled to the corresponding credit bureau for correction. Remember to followup (usually within a month's time) to make sure that appropriate action has been taken and that your information is now accurate.
Often times, once people find out that their credit is shot, they pretty much give up on the credit system entirely and don't even bother trying to understand how it works so they can turn things around. The problem with this attitude is that their credit remains bad. But if they had taken the time to educate themselves, they could have made better financial decisions for their future, either by being more savvy when looking for a bad credit loan, or by doing what it takes to improve their credit and be eligible for a standard loan. - 16759
You're going to have to be ready to get out there and sift through numerous bad credit lenders to find one that will offer you a reasonable deal. You're also going to have to prepare yourself to hand any prospective lender some serious documentation to sway them in your favor.
It's surprising to see how many people try getting a loan without knowing what their credit score is. In the case of mortgage loan, the score most widely used by lenders is the FICO score, named after Fair Isaac & Company, which is the company that calculates the score. Your credit score summarizes your credit history in one number and that number guides lenders in their loan approval decisions.
All financial institutions do not use exactly the same version of the FICO score. Specific examples of this are the credit card, insurance, and auto loan industries which all have their own little variation of the credit score that specifically meets their needs. Yet they all share the characteristic that says that the higher your score, the better a deal you'll be eligible for.
In case you didn't know it or it slipped out of your mind, you have three credit scores, not one. Because all three credit bureaus work independently, and because there's no legislation requiring that credit information be reported to all three bureaus, your credit file will vary from one to the other. The only way to get as accurate a snapshot of your credit profile as possible is to order your credit score from each one of them.
It's common knowledge that a sizable percentage of credit reports contain errors. When you receive yours, most experts recommend that you go through it with a fine-toothed comb in order to make sure that there are no mistakes there that make your file look worse than it really is. Any mistake you find should be signaled to the corresponding credit bureau for correction. Remember to followup (usually within a month's time) to make sure that appropriate action has been taken and that your information is now accurate.
Often times, once people find out that their credit is shot, they pretty much give up on the credit system entirely and don't even bother trying to understand how it works so they can turn things around. The problem with this attitude is that their credit remains bad. But if they had taken the time to educate themselves, they could have made better financial decisions for their future, either by being more savvy when looking for a bad credit loan, or by doing what it takes to improve their credit and be eligible for a standard loan. - 16759
About the Author:
If you're looking for a specific type of bad credit loan, such as for example to buy a house with bad credit in ATL, please drop by my personal finance blog where you'll find plenty of money-saving tips.
