How to Buy a House with Bad Credit
- Ricky Gandhi
- Aug 30, 2023
- 2 min read
Table of Contents
Introduction
What is bad credit?
How does bad credit affect your ability to get a mortgage?
How to improve your credit score
Pay your bills on time
Reduce your debt
Dispute any errors on your credit report
Get a mortgage with bad credit
Find a specialist mortgage lender
Offer a larger deposit
Get a guarantor mortgage
Consider other options
Conclusion
Introduction
Having bad credit can make it difficult to get a mortgage, but it is not impossible. There are a number of things you can do to improve your chances of getting approved for a mortgage, even if you have a poor credit history.
What is bad credit?
Bad credit is a term used to describe a credit history that is below average. This could include having missed payments, having a high debt-to-income ratio, or having a bankruptcy on your record.
How does bad credit affect your ability to get a mortgage?
Lenders use your credit score to assess your risk as a borrower. A lower credit score means that you are considered to be a higher risk, and therefore less likely to be approved for a mortgage.
How to improve your credit score
There are a number of things you can do to improve your credit score, including:
Pay your bills on time. This is the most important thing you can do to improve your credit score.
Reduce your debt. The lower your debt-to-income ratio, the better your credit score will be.
Dispute any errors on your credit report. If there are any errors on your credit report, dispute them right away.
Get a mortgage with bad credit
If you have bad credit, there are still a number of options available to you. Here are a few things you can do:
Find a specialist mortgage lender. There are lenders who specialize in mortgages for people with bad credit.
Offer a larger deposit. A larger deposit will make you look like a more attractive borrower to lenders.
Get a guarantor mortgage. A guarantor mortgage is a type of mortgage where someone else (usually a parent or family member) agrees to repay the loan if you default.
Consider other options. There are other options available to you, such as shared ownership or rent-to-buy.
Conclusion
Buying a house with bad credit is possible, but it will require more work and planning. By following the tips above, you can improve your chances of getting approved for a mortgage and buying the home of your dreams.
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