If you have a low credit score and want to buy a home, there are things you can do to compensate for this. There are other factors at play.
will consider credit scores of less than 620 or in the 500’s as low. Even with a low credit score, it is possible
to buy a home. There are lenders that
specialize in loans for buyers with low credit scores. Lenders may approve your loan application if
they understand the reason behind the low score, and you still meet their
requirements. Assemble your financial
records from the past two years such as bank statements, tax returns and pay
stubs, and be prepared to demonstrate your ability to make your payments. Certain lenders have different products that
don’t have requirement as to the credit scores. The amount you’ll need as a down payment will vary by lender and the
type of loan you are seeking, so plan ahead and save as much as possible. Since the interest rate you’ll pay with a low
score will be higher, you should prepare to pay a higher deposit to keep your
monthly payments as low as possible.
work to improve your credit score. Transfer balances from cards that have a high interest rate to something
better. Make all payments on time, and
don’t open any more lines of credit. Consider
using a credit repair company to speed up the process. If you get a loan with a low credit score,
you can improve the score and refinance a few years later.