Your credit history has been deemed an important aspect for the lender, when looking forward to seeking approval for mortgage. Bad credit or no credit score would compromise your ability to receive mortgage. Lenders would consider you significant risk to default on monthly payments.
- Know your credit score
Prior to applying for mortgage, you should consider knowing your credit score. A majority of online websites would help you provide your credit score for a relatively small amount. Good credit score would help you acquire mortgage without any trouble. However, bad or no credit score would pose some problems when applying for mortgage.
- What qualifies as bad credit history
Mostly, the lenders would be ready and willing to approve mortgage in case you have credit score of 620. Usually, the best credit score has been around 850. However, it would be relatively difficult to acquire a huge number, especially when you were at a young age and looking forward to purchasing first home.
- Maintaining steady income
When moneylender reviews your mortgage application, they would consider your ability to pay current expenses on time every month. They would also be able to check whether you have been employed with steady income for a minimum of two years. They would check for you making adequate money to take care of your monthly utility bills.
- Eliminate or reduce your debts
Overdue credit payments or debt from loans would affect your credit score. You should look forward to reducing your prevalent debts by paying on time. You should put in more amounts on your monthly payments to eliminate or reduce your debts.
- Be ready to pay more interest
Your bad credit score would attract more interest on your mortgage. The bank or financial institution would provide you requisite amount at higher interest rate to compensate risk of higher loan defaults.