What is classified as 'bad credit'?
Any history of poor credit usage can be regarded as bad credit, including previous mortgage arrears, non-payment (or late payment) of bills or credit cards, county court judgements and even bankruptcy.
Even though you may not have realised it at the time, there's a chance you may have a bad credit rating, which means a lender will need to take a fresh look at your credit status before proceeding with your mortgage application.
Avoid Needing a Bad Credit Mortgage
Fix Your Credit NowIf you have bad credit, you may get stuck with a high risk mortgage with a higher interest rate, prepayment penalties and high closing costs. The best thing to do is to avoid damaging your credit or to repair it as much as you can before you apply for a mortgage.
To fix your credit, begin by getting a copy of your credit report and getting your current FICO score. Make sure all the information on your credit report is correct, and if it isn't, get it repaired. Then consider consolidating your credit card debt, student loans and the like and always make your payments on time. In time, your score will improve and the money you save by getting lower interest rates will be worth all your work and sacrifice.
Advantages to a Bad Credit Mortgage
A bad credit mortgage may leave you with a bad feeling in your stomach, but in reality, despite the higher interest rate, this is really a smart next step towards reaching your financial goals. When you consider the benefits of home ownership and credit repair, the short term obstacles of a bad credit mortgage are well worth the risks.
You won't be throwing money away on rent, on time mortgage payments are the fastest way towards credit repair, and you'll truly be on your way to improving your financial situation through smarter investment of your money. Take advantage of bad credit mortgages to move forward. The short term pains are worth the long term gains.
|
