If you are looking to purchase a home, but your credit history is not as great as it could be, it can cause you to think it will be impossible to get a mortgage to make that purchase. You shouldn't assume that your credit can prevent you from being a homeowner, since it is still possible to receive the financing you need. Here are some tips that will help you get it.
Don't Pay Rent Late
Your credit score will be a big factor that plays into getting a mortgage, but there are other things that lenders look at. Even people with low credit scores can prove that they are responsible by not paying rent late while living in an apartment. Since rent is one of the biggest monthly expenses that you have to make, it's crucial that you don't fall behind on this monthly payment
Check with the mortgage lender you are working with and find out how rent payments play into your mortgage eligibility. It may require doing a reference check with your landlord, or providing proof that you paid on time by showing the lender your cashed rent check history.
Keep Trying With Different Lenders
Each mortgage lender will handle loans in their own unique way. One lender may have a different threshold for risk when compared to the other, so receiving a single rejection doesn't mean that all other lenders will reject you.
A rejection can also give you some valuable insight as you why your mortgage application was rejected, which will give you time to make improvements to bump up your credit score. For example, something that could be easily fixed is having high credit utilization, which mean you just need to pay the balance on these cards first. Low credit utilization shows that you are a responsible lender, because you are not using all of the credit that you have.
Explain Your Credit Score
Some mortgage lenders are willing to talk to you about your credit score and manually underwrite the mortgage instead of going through the automated process. It gives you the opportunity to explain why your credit is the way it is, which could be due to issues out of your control like unemployment or medical bills from a few years back. If your situation has changed, your credit score may not be an accurate reflection of your personal finances at the time.
For more information and assistance, contact a company that works with mortgages and home loans.