Purchasing a home or condo can seem impossible if you do not have a perfect credit score, which is why many people often put off buying a home Despite this common belief, there are options for those with bad credit to buy a home.
Why credit scores are important
Credit scores are a report card used to measure how likely you are to pay off your debts. Lenders look at your history of borrowing and paying, trying to gauge whether you pay on time and if you have any history of debt default.
The scores are assigned a number that gives a general sense of your historical behavior in paying debts. Generally, a score above 700 to 720 is considered a good score while below 640 is a bad score. So what can you do if your score is below 640?
Repairing your bad credit
Although repairing your credit can take years, there are steps you can begin now to help the situation. Focus on paying credit cards, student loans and other debts on time. Also, reach out to creditors to develop payment plans. Creditors do not want you to default on your loans any more than you do, so often they will offer options for you to pay off your debt.
Another way to repair your credit and prepare for a home purchase is to keep a monthly budget, saving as much money as you can and reducing your spending. This will increase the size of your down payment quicker and show responsible spending habits.
Seeking professional advice can help you find ways to mitigate or lessen the effects of your credit score.
One of the best sources for a financial mentor is a loan officer. Not only can a First Centennial Mortgage loan officer help you provide explanations and documentation for credit issues, they can advise you how to get the best mortgage for your situation.
Although bad credit might seem like an unsurmountable hurdle, you can still purchase a home. Call First Centennial Mortgage to find out how we can help you shop for the best loan and achieve your dream despite a poor credit score.
Note: First Centennial Mortgage and its Loan Officers do not provide credit repair or credit counseling services. You should seek independent information and advice before taking any course of action.