how to get good mortgage with bd credit history

The first step to getting a mortgage with bad credit is understanding how credit scores actually work, and why they affect your ability to get a mortgage.



Your credit score is based on several different factors, the amount of available credit you have, how much of the available credit you have used, the length of your credit history, your employment history, and whether you pay bills and debt repayments on time. Your credit rating is a number between 300 and 850, with 850 being the best credit score you can achieve.



As far as lenders are concerned, anyone with a credit rating of 700 or more is a “good risk,” meaning someone who is likely to make mortgage repayments on time every month until the loan has been repaid. Below that level, lenders consider you are more of a risk in terms of whether or not you will continue to make payments on time. If your credit score is below around 620, you’ll find it difficult to get an affordable mortgage, and below 500, most lenders aren’t willing to offer loans at all.



Repairing Your Bad Credit



So what can you do if you have bad credit? First, know that if you have bad credit and you want to apply for a mortgage, it’s important to do whatever you can to repair your credit before you apply. A second important point is that it can take six months to a year to rebuild bad credit enough that it will positively affect your ability to get a mortgage. So it’s also vital that you’re willing to be patient, and take the time to repair your credit before applying.


Repairing bad credit has two main steps: first, check your credit report for errors, and second, repairing any damage done.

To check your credit score for errors, simply obtain a copy of your report from one of the three main credit-reporting agencies – Equifax, Experian and TransUnion. Examine the report thoroughly, and check for errors or out-of-date information. Even a single error can reduce your score by a significant margin, so this is a worthwhile step to take. To fix the error, call the creditor involved and explain why you think the item should be removed from your report. Make sure the creditor agrees to send you a letter verifying that the item was removed, to provide proof for the credit bureau.



Next, it’s time to start repairing your credit score. The most effective way to do this is simply to pay your bills on time, and keep your debt total low, while maintaining a small amount of available credit. Lenders like to see a fairly small amount of available credit, with a wide gap between the amount of credit you have, and the amount you actually use. Another point lenders look for is a long credit history, so if you have old credit card accounts that are in good standing, keep those open and active in preference to newer accounts.