How To Buy A House With Bad Credit
FHA is fast becoming the bad credit home loan because of its relaxed guidelines with regard to credit. No longer is bad credit a reason to stop a person from getting a home loan, due to these bad credit home loans.
So, how to buy a house with bad credit?
FHA guidelines require a minimum credit score of 580 in order to qualify for a home loan. For those over the 580 number, this is an item that can be checked off as a positive when the loan application is set for review. Feel good about this, as there are some qualifying hurdles when being approved for a home loan and you have gotten over a big one.
For those that do not have the 580 credit score, they cannot qualify at this point for the bad credit home loan. That said, except for some circumstances like a previous foreclosure or recent bankruptcy filing, we have found that almost all borrowers can be eligible for a home loan within 12 months by simply working to raise their credit score. Most in fact are looking at far shorter time to raise the scores with an average of 160 days. Tremendous effort, and large amounts of money are not needed to raise your scores, simply strategy.
There are two distinct halves of your credit report and subsequently your scores. One way of looking at the sides is the past and the present. If you are looking for a bad credit home loan, it is likely you have items that are negative on your report that took place in you past. Late payments, perhaps items in collections are examples. Get your credit report at GovHomeLoans.org and spend 10 minutes looking at these items that may be leading to a bad credit score, and slowing your chances at getting a loan today. Many of these items can be removed by working with the creditor, establishing communication and finding out what is possible can take a few minutes and go a long way. There are groups that we can refer you to if you would like to have someone else work on the negative items that have led to the bad credit if you would like. Many times this is the fastest way to address these items, bring in the pros.
The other side of your credit has to do with building credit, or the present. The credit bureaus that report your scores are essentially reporting how well you manage debt. If you have not had any debt, or open lines of credit in a few years, you will not have bad credit but may have no credit at all. It is important to have three open lines of credit at a minimum. Credit cards, car loans, student loans, personal lines of credit, are good examples. You would be amazed how much your scores can improve by simply having open lines of credit that are paid on time. You don’t want to go into debt just to get a home loan, but a few credit cards with small balances should not hurt you and it does a world of good.
An hour of understanding the negative items on your credit report, and an hour of opening the lines of credit will help you get your scores fast. This is how you can get yourself a bad credit home loan.
Our specialists are ready to help you whatever your situation is, find out what you qualify for.