Do you have a less-than-ideal credit score? If so, you may struggle to get your home loan application approved. Your credit file contains information that lenders will use to assess your suitability for a home loan. Banks and creditors can afford to be picky about who they lend to, so you’ll need to be smart. This article will explain some ways that you can increase your chances of being approved for a home loan, even if you have bad credit history.
1. Get a free credit report
If you have been struggling to get a home loan, it may be because you have a bad credit score. That’s why it’s worth going online and applying for a free credit report. This will help you see whether you’ve been ruining your own credit score by applying for loans with multiple lenders. Loan providers will add a search mark to your credit report when you apply to them and they turn you down. Lots of search marks can look bad on your credit report and may negatively affect your credit rating. To avoid this you can apply online or over the phone for ‘instant’ quotes – these services won’t add search marks to your credit report.
2. Apply to have old defaults removed from your credit report
If you have ever defaulted on a debt, this will be listed on your credit file, and can give you a negative rating which may prevent you from getting a home loan. This is true even if you have paid off the default; it will be marked as “paid” but will not be removed. Defaults can apply to your telephone accounts, electricity, gas, water services, and your trade accounts, besides loans and mortgages. The good news is that defaults can be removed after five years. That’s why one way to improve your credit score is to apply to have old defaults removed from your file.
3. Fix your bad credit score
Once you’ve seen your credit report and have a full picture of what lenders are seeing, you’ll have a clear idea of where you can improve. You know that you’ll pay far higher interest with bad credit so it’s extremely worthwhile to fix your credit score. But it can still be difficult to take the right steps. Fortunately, there are many law firms online that will offer a free evaluation and then a paid service where they’ll fix your bad credit. These services are economical and can save you money by helping you apply for lower loan rates.
4. Find a home loan on a mortgage marketplace
Once you have fixed your bad credit, or at the very least improved your credit score, it’s time to find a lender that will give you the home loan of your dreams. Online mortgage marketplaces are worth a look. They will give you free, instant, no-hassle quotes and won’t worsen your credit rating by adding checkmarks to your credit report. You won’t be subjected to credit checks, but you will have to provide your credit report score. The better your score is, the lower the exclusive rates from top lenders will be.
Applying for a free credit report is one of the best ways to get a home loan when you have a less-than-stellar credit score. You will be able to see where improvements need to be made and take the necessary steps to start improving your score. With a lower score you’ll be able to boost your chances of being approved for a home loan.