dcsimg

Bad Credit Equals a Bad Credit Mortgage

By Sheryl Landrum
Mortgage Credit Problems Columnist


Featured Home Equity Loan Provider
    • No Appraisal
    • No Out of Pocket Costs
    • Quotes from Top Lenders
    • Find out if you Qualify!
Whether you are looking to purchase a new home, refinance an existing home mortgage, or take out a home equity line of credit or home equity loan, your credit or fico score is the largest determiner of whether or not you qualify for a prime or a subprime (bad credit mortgage). So what can you do to protect your credit and qualify for the lower interest rates of a "prime" mortgage?

Turning Bad Credit into Good Credit

  • Pay your bills on time. Nothing turns good credit into bad credit faster than not paying your bills on time. This means do not let your bills become 30 days past due! Missing a payment date may mean you receive a late charge, but allowing a bill to become 30 days late means you will be reported to the credit bureaus. NEVER allow your mortgage payment to be late. A 30 day late notice on a mortgage virtually guarantees a bad credit mortgage when you refinance or purchase a new home.
  • Manage your credit wisely. Keep your credit card balances below 50% of your available credit. Also, length and breath of your available credit is important in avoiding a bad credit mortgage. Lenders like to see a lengthy (and positive) relationship between you and your creditors; don't close credit accounts when you pay them off.
  • Three to five is a great number. When looking for a new mortgage, or when trying to refinance a current one, lenders like to see three to five active trade lines.
  • Not too fast too soon. Don't open too many credit lines at once. Remember, slow and steady wins the race against a bad credit loan; opening too many credit lines at once can lower your credit scores.
Following these few steps can help you turn bad credit into prime credit avoiding a bad credit mortgage with a higher interest rate.

Compare New Home Loan quotes in minutes

Property Type:
State:
Credit Rating
×
We have made updates to our Privacy PolicyPrivacy Policy to reflect the implementation of the General Data Protection Regulation.