Buying your dream home or taking a loan is near impossible if you have bad credit. This is because one’s credit score is usually used by lending institutions as a way to determine how risky it would be to lend money to a specific individual.
Unfortunately, the credit score does not really represent one’s intent to pay because having a bad credit can mean that a person has simply had a string of unfortunate incidents that caused delay payments. Factors such as a single day delay in payment, unemployment, or maxing out a credit card due to necessity can damage one’s credit score badly. Below are some information on how you can get a loan or buy a home despite having bad credit.
Choose a Shorter Tenure
A shorter tenure means quick contract termination. This is attractive for lenders because this shows confidence in being able to pay your loan. Aside from this, a shorter tenure means less money paid towards interest and the sooner you can get everything paid in full.
Approach the Right Lender
People who get turned down for a loan because they have bad credit are usually turned down by banks and other large financial institutions. This is because banks and large financial institutions will always choose to lend to those with lesser possibility of defaulting. This is why approaching the right lender is important. The right lender will consider cases that typical lenders will not. Approaching the right lender can done with the help of mortgage professionals who can connect a borrower to a private lender with terms that are aggreeable for both parties.
Producing A Higher Down-payment
Coming up with a higher down-payment when trying to borrow for a house can make lending to you more attractive to a lender. This also works in your favour later on because a higher down-payment means getting a better interest rate as well.
Have A Trusted Co-Signer
Applying for a loan or a mortgage with a trusted and secure co-signer can get your application approved regardless of bad credit. A bonus is that you might be able to negotiate a lower interest rate if with a trusted co-signer.
Contact a Private Lender
Because private lenders are usually individuals or a business with a small group of investors, you’ll be borrowing from people who are likely to take a hands-on approach to approving your loan. They understand that a bad credit score is caused by many factors and is not a real indicator of future ability and intent to pay. Thus, private lenders look into other factors such as current employment status, income, and the viability of the loan, giving you a higher chance for approval.
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