How to Buy a House With Bad Credit

by HomeLoan.com
Buying a house with bad credit may not be the best decision unless you really know that you will be able to make the payments long-term. Lenders will look at you as more of a risk, potentially resulting in a lot of rejections. There are many things that you can do to increase your chances of obtain a home mortgage loan with bad credit, but it is not something that can be done overnight.

Step 1

Get a free copy of your credit report. You can do this by going to annualcreditreport.com and requesting a copy of your credit report instantly. There are three different credit reporting agencies, Equifax, Experian and Transunion. They may have different scores, but should be quite similar.

Step 2

Look over your credit report for errors. Sometimes your credit report could be brought down by errors that can be no fault of your own. If you notice that any of your creditors have made a mistake on your report, you can send a letter of dispute to the credit reporting agency the credit report came from and request that it be changed.

Step 3

Reduce your debts. A major problem in obtaining a home loan is having too much debt, and with bad credit a potential lender may think you will not be able to make the payments. Consolidate your credit cards so that you only have one or two open, and that you have no more than 30 percent of the balance used.

Step 4

Save your money for a larger down payment. Staying in your current living situation for even six months more to be able to save up a larger down payment can greatly increase your chances of obtaining a home loan. Lenders do factor in the amount that you have saved up to put down on a home, and this can change a no answer to a yes.

Step 5

Pay all of your debts on time. As simple as it may sound, this can significantly boost your credit score up to 20 points. If you are looking for a little boost to help your situation, this is something that you can easily do. You may have credit issues in the past, but this will show potential lenders that you will be able to make the payments.


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