Almost everyone makes a financial mistake now and then. When those mistakes add up, it impacts their credit score negatively. Eventually a person may be concerned about whether they can purchase a home. Even if a person does have a lower credit score, there are possibilities that enable them to get a bad credit home loan. This can help them find and purchase the home they want and give them the chance they need in spite of mistakes they might have made.
What Causes a Poor Credit Score?
Poor credit scores can happen without the person realizing they’ve made a big mistake. An example would be when a person has student loans that they’re making payments on but they don’t have a lot of other credit loans. That person may have a lower score than someone with more credit loans but no student loans. As that saying goes, you have to have credit before you can get credit. There are many ways to improve your scores however, missing a payment or two could have a big impact on the person’s credit score. Others who have low credit scores might have medical bills that are unpaid, or other unplanned bills arise that they are unable to take care of in a timely manner.
No matter why someone has a poor credit score, there are options available. It’s possible for someone to apply for a bad credit home loan so they can get the money to purchase the home they want. In some cases, it likely won’t be as easy for them to obtain a loan as it would if they had a higher credit score, but it is possible to do.
Is It Possible to Get a Home Loan With a Very Low Credit Score?
Those who have a low credit score have a number of options available to them today. One of the most commonly used ones is the FHA loans. These loans are mainly designed for those who have a 580 or higher score and enable them to get a loan with as little as 3.5% down. However, those who have a lower score may still be able to get one of the FHA loans if they have more money to use for a down payment.
There are other options for a bad credit mortgage as well. VA loans are available for active-duty military, veterans, and surviving spouses. Fannie Mae and Freddie Mac offer loans to low-income families that are looking for a home loan. Anyone who is ready to look for a home loan even if their credit score isn’t great right now will want to look into each of the available options to see which one is going to be right for them.
How Can Someone Improve Their Credit Score?
Despite the fact there are loan options for those with a low or very low credit score, it’s still a good idea for the potential borrower to try to bring their credit score as high as possible before they apply for a loan. They’ll want to see what the credit scores for home loans are to ensure they at least meet the minimum credit score for the program they’re interested in. If they don’t meet the minimum or they’d rather take the time to improve their credit score to get a better interest rate, they do have options there as well.
It can be helpful before applying for a loan to take the time to improve credit for home loan by working on paying off as much debt as possible and getting rid of any debts that have gone to collections. If they have unpaid bills, for instance, they’ll want to pay these off quickly. They’ll also want to look into getting a credit card and keeping a low balance to boost their credit rating quickly. Some things, however, will just take time to be removed from their credit score. For some, it may be beneficial to turn to a financial adviser to help gain the knowledge on how to take the correct steps to improve scores.
If you’re ready to purchase a home but you have a low or very low credit score, you do have options available to you. Gain as much knowledge as possible, not only on your credit scores and how to improve them, but on they type of loan you are looking to invest. With the help available today, no matter what your credit score might be, you do have options that can help you purchase the home you’ve been dreaming of.