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The global pandemic has taken a toll on the economy, and the home prices are at a tumultuous stage. People are combating a crucial financial condition, while some of them are out of jobs. The entire situation worsens as your credit score dips lower than usual. This can be fatal when you were all set to land a mortgage and move into your new house in 2020. But do not back down, bad credit loans in Houston can help you achieve your dream.
The mortgage rates are low, and this is the best time to buy the house loans for bad credit in Houston. Typically, low credit scores lead to high loan rates – this is not problematic for the government-backed loans as you can get competitive rates. But your FICO score is still in focus. Even though the advertised mortgage rates are low, it may be unavailable due to economic uncertainty. If you wish to find out how your future is going to look with low scores, take a look below.
Low credit is actually a thing
Many lenders may brush off the situation as not a huge deal, but it matters. The common credit-scoring model ranges between 300 and 850. If your credit score falls between 800 and 850, you have an exceptional credit score. But the poor credit score ranges between 300 and 570. Of course, the minimum credit score requirement depends on the lenders and the category of the mortgage. In recent times, the lenders are increasing the score requirement due to a high unemployment rate. In the future, it may be impossible to get a mortgage with a low or poor credit score. So, work on your FICO score before you miss out on the chance of getting a government-backed mortgage.
So is it possible to buy a home?
The answer is, yes; however, the bad credit is a relative term. It does not mean the credit score is not important. A low credit score is mistaken as bad credit, but it is not the reality. Even though you do not miss a payment, you might have maxed out on the credit cards. In this scenario, you are left with bad credit but you can overcome. Ask the lender for his guidance on how to fix the credit. It is better to start the process after going through the credit score requirements. For example, the FHA loans allow buyers with 500 credit scores only if they are ready to put down 3.5% of the loan value. In case, you have served as a veteran and your working history is eligible, you can apply for a VA loan.
If your loan application is stuck due to a few credit scores, work on it. Rebuilding your credit score is easy. Make sure you have found out the ways, and many lenders are eager to help the borrowers with bad credit. Of course, shop around to find the best rates in Houston. Check the loan requirements, browse the loan programs, and get started!