Your credit history is one of the most important details lenders consider when approving you for a mortgage. Bad credit or a low credit score will compromise your ability to get a mortgage. Lenders will consider you at risk of defaulting on your loan. Obtaining a mortgage has become even more difficult due to the struggling economy. Add to this the record number of foreclosures in the housing market. However, it is still possible to qualify for a mortgage and buy a home, even if your credit history is far from perfect. Find out how now, as Moolr look at how to qualify for a short term loan with bad credit..
To qualify for a mortgage, you will need your credit score. Your credit score is a three-digit number derived from your credit history. It is used by lenders when you apply for a credit card and is a key factor in receiving a mortgage from a lender.
In general, lenders will be more willing to approve a mortgage if a person has a credit score of at least 620. The best credit score is around 850. It can be difficult to achieve such a high number especially if you are in a younger age bracket and are trying to purchase your first home.
When lenders look at your mortgage application, they will take into account your ability to pay your current expenses on time every month. They will also check that you have been employed with a steady income for at least two years. They want to see you are making enough money to pay all your bills every month.
Debt from student loans or overdue credit card payments will affect your credit score. About 35 percent of your credit score comes from your payment history. Focus on reducing your existing debt by always paying the minimum amount of your credit card payment and your student loan payment on time. If possible, put down more than the minimum amount each month to further reduce or eliminate your debt.
To qualify for a mortgage with poor credit, you may want to adjust how much money you owe so it is significantly lower than how much credit you have available. Improving your debt to credit ratio is one of the fastest ways to improve your credit score and make you more attractive to lenders. You can improve your debt to credit ratio by: