Having bad credit is a major roadblock to financial freedom. A bad credit score can prevent people from enjoying a number of experiences that many others enjoy, although it doesn’t have to last forever. Having a strained financial history will make it difficult, but not impossible, to purchase a home. A mortgage is a huge and long-term financial responsibility, and even though there are lenders who will refuse to grant a loan to those with past issues, there are plenty of bad credit mortgage lenders who will.
Being turned down for a loan is disappointing, but it’s important to find out why the loan was refused. If bad credit is the culprit, ask the lender what steps should be taken to improve it and wipe bad financial decisions off the books in order to move forward. Some issues that may prevent loan approval include outstanding tax payments, a bankruptcy filing, defaulting on an existing loan, and requesting a high loan amount. Resolving as many issues as possible is helpful and lenders can shed some light on what to do. But if a lender still refuses a loan, it’s time to seek alternatives.
Bad Credit Lenders
Seeking other options for a mortgage is necessary when conventional methods don’t pan out. Depending on the situation, a Federal Housing Administration (FHA) loan may be a viable option for those with bad credit. FHA loans will offer lower down payments and they will accept buyers with bad credit in some cases. For instance, FHA loan lenders will take a buyer who has a bad credit history into consideration if they are working to clear it up.
Bad credit mortgage lenders provide a number of alternative options to people with poor credit who want to buy a home, but they do have their own rules and regulations. For example, even though credit scores can be low, bad credit lenders do have a minimum. This will depend on each individual lender. Be careful of companies who may actually cause more harm than good by charging outrageous fees or extremely high interest rates.
For home buyers who can’t qualify for a conventional mortgage because of past credit issues, there are other options. Traditional lenders who have turned down buyers may be able to provide resources and information for government programs and other lending options. Additionally, certain lenders who provide loans for those with bad credit histories can discuss options like repairing credit or adding a cosigner to the loan.