If you want to purchase a home but have a poor credit history, you are somewhat limited in available loan options. Should you need to buy a house right away, you can apply for a bad credit home loan through a lender who specializes in subprime mortgages.
However, you should know that subprime mortgage loans carry very high interest rates as well as requiring a much higher down payment. Also, if you fall late on payments, penalties associated with subprime loans are much stiffer. It can be quite easy to worsen your credit situation by accepting a subprime mortgage loan so consider your ability to make payments carefully before applying.
Raise Credit Score
Of course, the absolute best option for buying a house with bad credit is to repair it before beginning the process. Not only will having a better credit score open doors to higher loan amounts, but it will also lower the amount of interest paid and down payment required, saving you a significant amount of money. You should seek to obtain a credit score of at least 620 or higher in order to obtain better loan offers.
You can either opt to repair your credit yourself, or you can request help from such professional credit repair specialists as are available at repair-credit-today.com. Our team of experts has the knowledge, experience and time to dedicate to rebuilding your damaged credit score.
However, if you feel confident enough in tackling the situation yourself, following are some tips for raising credit scores and increasing your chances for securing a mortgage loan.
Scrutinize Credit Reports
Obtain a copy of your credit report from all three credit reporting agencies and scrutinize all information. Credit bureaus do not verify information received from creditors, they simply record it so you will be surprised at the number of errors which exist.
Compile a list of negative items to contest. Look for items which are obviously not yours, items that are more than 7 years old which should have already been erased from your report, incorrectly labeled items or items which aren’t labeled but should be after an action (i.e. “Paid” or “Settled”).
Letter of Dispute
Send a Letter of Dispute to each of the three credit bureaus which show mistakes contesting these negative charges. Allow 30 days for the bureaus to contact the creditors and for the creditors to validate or correct the charges. If they cannot validate the information within that period, the credit bureaus should eliminate them from your report.
At the end of the 30 day period, you should receive a letter from the credit bureaus stating that the charges were validated, corrected, or dropped from your report. If you do not receive a letter, contact them again requesting status. You should also request another copy of your credit report to verify if the charges have actually been removed.