How to Buy a House if You Have Credit Problems

Obtaining a home mortgage loan when your credit is less than perfect can be hard to do. Lenders are going to look at your long term credit history to see if they will be able to lend to you. They want to know that you will be able to make the payments month after month for several years. There are things that you can do to help your chances of obtaining a mortgage on a house.

Step 1

Request a copy of your credit report. You can go online to annualcreditreport.com and receive a free copy of your credit report each and every year. If you have not seen a recent copy of your report, this is something you will want to do to be able to see how bad your credit actually is.

Step 2

Take a look at your credit report and check for any errors. There may be errors on your report made by your creditors, which could bring your score down. If you do find any errors on your credit report, you can dispute it with the credit reporting agency that the report came from. You can do this either on their website or by sending a letter of dispute in the mail.

Step 3

Pay down your current debts. You do not want potential mortgage lenders to see that you have all your credit maxed. You should only have a couple of credit cards, and you should have no more than 30% of the credit limit used. This will show the potential lender that you know how to manage your credit cards properly.

Step 4

Pay all your bills on time. This may sound easy, but it is important because the lenders are going to look at how you currently pay your bills. Plus, just by paying all your bills on time for two months in a row, you could raise your credit as much as 20 points.

Step 5

Start saving your extra money. It is possible to buy a house if you have credit problems, but you may need a little more money up front to do so. Anything more that you can save up is going to help you out greatly. Even if it means staying at your current residence six months longer, it will help you out significantly.