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How To Get A Home Loan With Bad Credit

February 7, 2023

 

Just because you've had problems with credit in the past, that doesn't mean you can't get a home loan. With the right preparation and knowledge, you can get a home loan with bad credit and start building your financial future.

 

How To Get A Home Loan With Bad Credit

 

The first step to getting a home loan with bad credit is to understand your credit score. Your credit score is a three-digit number that lenders use to determine your creditworthiness. It is based on your credit history, including any late payments, defaults, bankruptcies, and other negative marks.


You can check it yourself (and you should!) with sites like Equifax and Creditsavvy. The higher your credit score, the more likely you are to get approved for a loan. If your credit score is below 600, you may have difficulty getting a loan.

 

 

The next step is to work on improving your credit score. This can be done by making all of your payments on time, paying off any outstanding debts, and avoiding taking on more debt. You should also check your credit report for any errors or inaccuracies and dispute them if necessary.

 

credit file documents

How To Improve Your Credit Score

Obviously the better your credit score the easier the process of getting a loan - it can also mean lower interest rates and better loan terms. If you're looking to improve your credit score, here are some things you can do to get started:


  • Pay your bills on time: Late payments can have a big impact on your credit score, so make sure you pay all of your bills on time.
  • Keep your credit card balances low: High credit card balances can make it look like you're overextended and can hurt your credit score. Try to keep your balances below 30% of your credit limit.
  • Don't close old credit card accounts: The length of your credit history makes up a big part of your credit score, so try to keep your oldest credit card accounts open, even if you're not using them.
  • Check for errors: Review your credit report for errors and report any inaccuracies to the credit bureau.
  • Be careful when applying for new credit: Every time you apply for new credit, it shows up on your credit report and can have a negative impact on your score. Try to limit the number of new credit applications you make.



 

Once you have improved your credit score, you can start looking for lenders who offer home loans with bad credit. It is important to shop around and compare rates and terms from different lenders. You should also consider applying for a secured loan, which requires you to put up collateral such as your home or car. This can help you get a better interest rate and more favorable terms.

 

Can I Get A Home Loan With Bad Credit?

 

When applying for a home loan with bad credit, it is important to be honest and upfront about your credit history. Lenders will want to know why your credit score is low and what steps you have taken to improve it. You should also be prepared to provide proof of income and other financial documents. 

 

Finally, it is important to be patient and persistent when applying for a home loan with bad credit. It may take some time to find the right lender and get approved, but it is possible. With the right preparation and knowledge, you can get a home loan with bad credit and start building your financial future.


Bad credit can make getting a home loan feel impossible, but at Logan Home Loans, we know that just because you've had some missteps in the past, it doesn't mean you can't reach your homeownership goals. We believe in second chances, and we're here to help you get the home loan you need to make your dreams a reality.


Here's the thing - even with bad credit, there are still options out there. And that's where we come in. As mortgage brokers, we work with a variety of lenders and have access to loans that may not be available to you if you go directly to a bank. We know the ins and outs of the industry and can help you find a loan that fits your individual needs and circumstances.


Don't let bad credit hold you back. We understand that life happens, and sometimes things don't go as planned. That's why we're here to help. We'll work with you to find a solution that works for you and get you on the path to homeownership.



Remember, just because you had bad credit in the past, it doesn't mean you can't get a home loan. At Logan Home Loans, we're here to help you turn your homeownership dreams into a reality. Get in touch with us today to learn more about how we can help.


 

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The Australian Banking Association (ABA) has launched a campaign encouraging borrowers struggling with loan repayments to seek help, in a valuable reminder there are options available if you're finding it hard to keep up with your mortgage. Your bank may be able to: Reduce your home loan repayments. Pause your repayments temporarily. Switch your repayments from principal and interest to interest-only temporarily. Increase the length of your loan (thereby reducing the repayments). ABA CEO Anna Bligh said banks understood many borrowers were facing challenging circumstances. “Banks stood by their customers during the COVID-19 pandemic, deferring payments for people who for the first time in their lives found themselves unable to pay. Banks stand ready to help people again now,” she said. “People who are finding their finances are stretched should not feel they have no options and they have to do it on their own. Banks have dedicated, highly experienced teams ready to help.” As your broker, I'm also here to help. You're welcome to contact me for advice; I can then speak to and negotiate with your lender on your behalf. The key thing is to move fast, because the further you get ahead of the problem, the more flexible and helpful banks tend to be.

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