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The thought of landing a home loan successfully can feel contradictory. When it comes to mortgages, a series of challenges are likely to overpower you. From getting the home loan to finding the right loan product, a lot of things you need to consider. With a poor credit score, it can feel complicated too. Thankfully, the U.S. mortgage industry allows everyone to get a home loan. Even if you have a low credit score, you can still apply for a home loan in Houston, TX.
Now, you may ask – why does your credit score a factor in your home loan? A credit score shows three digits and acts as a snapshot of your financial health. Credit unions, bank lenders, and private lenders check the credit score to see whether you are risky. There is a difference between a credit report and a credit score. The former shows the whole picture of credit history including late payments and bad remarks. These factors adversely affect credit scores. Moreover, the credit score is also known as the FICO score. When FICO scores are between 680 and 740, you have excellent credit. Anything below this range is often considered to be bad credit.
Don’t worry when your credit score goes below 620! Private mortgage lenders are ready to offer relaxed eligibility criteria and house loans for bad credit in Houston. Let’s go over this article and find out a way to get a bad credit mortgage.
Check your Credit History
Many times lenders find out the reason behind bad credit is the inaccurate credit history. The denial of the mortgage application might cost them poor credit. You can check the credit and identify wrong entries. So, the very first thing is to take a long look at the report. This is an easy way to pick out the errors that have left an adverse effect on the score. If there is misinformation, you can resolve the issue right away. According to the Consumer Financial Protection Bureau, buyers can request a free annual report and start looking for errors. If your score is below 500, things can seem definitely challenging. In this context, rebuilding your credit score is a step to achieve homeownership.
Get Approved with Poor Credit
Purchasing a mortgage with bad credit is not next to impossible. You may carry a poor credit range; however, you will be charged with a higher interest rate. Along with it, the monthly mortgage payments may be deadly to keep up. When the conventional loans are out of your reach, you can start shopping for various loan options like FHA programs, VA programs, and USDA programs. Besides this, you can also find first-time buyer programs that help you with closing costs and down payments.
Bad credit does not necessarily become a reason for mortgage application rejections. Lenders also check why you have poor credit today. For such considerations, you may have to submit a letter detailing the reasons behind bad credit. So, discuss your situation with a lender!