Bad Credit Home Loans – Fix Your Credit to Lower Your Rate
Posted on | October 25, 2009 | No Comments
Bad credit home loans have become very popular during the current recession but many home owners and future home owners want to get the lowest mortgage interest rate possible. If you have bad credit you are not going to get the low advertised mortgage rates you are seeing on the news and Internet. You are going to get a rate higher because you are a risk to the mortgage lender.
Your credit score is basically your financial report card. If you have made very smart financial decisions in the past, you have missed very few bill payments and you stay up to date on all of your financial information then it is likely that you are going to get an A on your report card or a score of 740 or higher. If the opposite is true in that you have missed several payments on bills, all of your credit cards are maxed out and you have no idea how much money you currently have then you are likely to get a D or a credit score well below 650.
If you are in the D range of a credit score then you need to work on improving your credit to get a low mortgage rate. When a mortgage lender or any money lender in general sees that you have a poor credit score they are going to assume you are a very risky borrower. By that, it means that you have a strong chance of defaulting on your loan.
Most lenders have seen a huge drop in profits because they took on too many risky loans in the recent past. With this memory firmly etched in their brains they want to take as little risk as possible. This does not mean that they will not fund your loan but it does mean that you are going to have to show some progress on your credit score to get an acceptable home loan rate.
There are many companies out there that are willing to help you fix your credit but the best thing you can do is to actually pay all your bills on time and work on getting out of debt. This might take getting a second or third job but to gain access to low interest rates on your credit you are going to have to pay down those credit cards and make sure all of your bills are paid on time. When this happens you will be able to get a lower mortgage rate.
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Author: Heather Best
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