Most people think they can no longer get a loan or a mortgage if they have a bad credit score. However, this is not true. There are many ways to get a reasonable loan for your house, even with a bad credit history!

 

1. Keep track of your credit score.

 

Before looking for a mortgage, it’s best to check your credit score first, no matter how bad it may be. In general, a credit score lower than 650 is considered poor.

 

Your credit score can dictate which options you have for your mortgage. The easiest way to know your credit score is by requesting a credit report to these three major institutions–Experian, Transunion, or Equifax. You get one free credit consultation from any of these three bureaus. 

2. Consider getting government loans.

 

You’re more likely to have limited options from private banks and lending companies with a bad credit score. Because of this, your best choice is to get a government loan.

 

The first thing you have to try getting is the Federal Housing Administration mortgage. They only require a downpayment of at least 3.5% of the property value and current employment records.

 

Next are the direct loans sponsored by the US Department of Agriculture. They are based on the proof of a person’s capacity to pay monthly bills, not by credit score.

 

Lastly, if you’re retired military personnel or a spouse of one, you can get a mortgage from the Department of Veterans Affairs. The value of your mortgage would be based on you or your spouse’s service time to the military.

 

3. Prepare for a bigger down payment

 

The downside of getting government loans is that sometimes, they’re not an excellent deal. The loan prices tend to be higher to acquire properties with less value. If you’re considering this, you can apply to private banks or lending companies. You would only have to pay larger down payments to get a good deal–at least 30%.

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