Bad Credit Mortgage
Your credit score is an integral component of the mortgage pre-approval and credit approval processes. It is a widely accepted indicator of the risk level in approving your mortgage or credit application, and it reflects how successful you will be in managing and making your payments.
A credit score is derived from a number of factors within your credit history, including:
- Payment trends – Do you miss payments or always pay on time?
- Payment preferences – Do you pay the minimum amounts due or pay balances in full?
- Credit utilization – Do you use credit for major purchases only or for just about any purchase?
- Credit checks/inquiries – How many different types of credit applications do you submit?
Repairing Bad Credit
Most bad credit situations are a direct result of a poor payment history – late or delinquent payments, inability to meet even the minimum payment due, sporadic payments on overdue accounts, and making payments against low-interest accounts while ignoring larger and/or higher-interest bills or credit cards.
Through time and patience, you can repair and rebuild your credit score – this will require a significant amount of self-discipline to prove that you can manage credit with the appropriate amount of discretion and responsibility. This will widen your scope of borrowing options and improve the level of probability that any credit card, loan, or mortgage applications will be approved.
At Mortgage Intelligence, we can work with you to develop a personalized plan to improve a bad credit situation and improve your credit score. This could include obtaining your credit reports and reviewing them for accuracy or errors on your behalf.
What Steps Can You Take?
This may seem odd, but one way to improve a bad credit situation is to actually apply for more credit. While you may find it difficult to get approval from a major bank, you might be able to successfully apply for a department store or gas station credit card – just make sure that you restrict yourself to a two-card limit.
Once you have these cards, you should practice the following types of discipline and discretion:
- Make your payments on time
- Pay off the balance in full
- Keep any balances to less than 20% of your credit limit
- Do not make minimum-only payments
- Do not accumulate new charges if you have not paid your balance in full
- Do not charge more than you can afford just to get extra rewards or points
- Do not apply for a new card just to get a one-time deal or the deal-of-the-day
Tip: You should avoid using prepaid credit cards. While you can obtain these types of cards regardless of your credit history, they are not recognized by/reported to credit-reporting agencies; therefore using such a card will not help in repairing and rebuilding your credit score.
At Mortgage Intelligence, Natasha Bridgmohan and her team of experts have developed a number of plans that can be personalized to help improve the credit scores of individuals just like you.