How to Buy a House With Bad Credit Scores

If you want to obtain a home mortgage loan, it is important that you stay on top of your credit. You can purchase a home with bad credit scores, but typically you are going to need a larger down payment, and you may not be able to get the home you dreamed of. Lenders are going to look at you as more of a risk, and many may turn you down.

Step 1

Check your credit report. You can get a free copy of your credit report every year online at annualcreditreport.com. There are three credit reporting agencies, Experian, Equifax and Transunion. These agencies have slightly different information but will give you a good idea of where you stand on your credit.

Step 2

Look at your credit report for any errors. Sometimes your credit can be brought down by errors no fault of your own. If you find that your creditors have made a mistake on your credit report, dispute the error with the credit reporting agency that the report came from by sending the agency a letter or disputing it online on the agency's website.

Step 3

Save for a higher down payment. You may find that lenders turn you down because of your bad credit score. Staying in your current living situation for another six months to save more money may turn a no answer into a yes. A higher down payment also results in a lower mortgage payment, which will save you money in interest.

Step 4

Lower your bad debt. Bad debts are payments that you do not need to have, such as credit cards. These types of debt can bring down your credit score and affect you negatively. You should have no more than 30 percent of your limit charged on your credit card. This will show potential lenders that you are able to manage your credit properly.

Step 5

Pay all of your bills on time. Just making all of your payments on time for two months in a row can raise your credit score as much as 20 points. This can be a huge factor in lenders' decisions. If you have a little extra in your budget, put it toward your down payment, or toward paying down bad debt.