How Your Credit History Affects Qualifying for a Bad Credit Mortgage

By Gil Mackey
Mortgage Credit Problems Columnist

Bad Credit History Affecting Your Mortgage Application?

Your credit plays a major role in qualifying for a bad credit mortgage. Your credit history helps mortgage lenders predict how you will handle your loan repayment. Your score reflects your ability and also your willingness to pay your obligations. This score often determines how mortgage lenders will view their risk when granting a bad credit home loan. Your score is affected by:

• Your payment history: Especially your recent record of paying or not paying on time.
• Amount of credit used versus amount available: If you're maxed out or have too many accounts your score may drop.
• Type of credit: mortgages, secured loans (like car loans) and credit cards are looked at. Your payment history on a mortgage is counted more heavily for or against you than that of a department store card.
• Longevity of your accounts: longer is better; it indicates that you have experience with money management.
• Derogatory charges: Collections (especially unpaid), judgments, tax liens, repossessions, outstanding child support, and foreclosures are considered serious. These marks against you will very likely prevent you from getting a loan until they are cleared up and a new history has been established.
  

Clean Up Your Credit

The top three things you can do to improve your chances of qualifying for a bad credit mortgage are:

• Pay your bills on time
• Reduce outstanding balances
• Resolve any collections accounts
• Make sure all credit information is accurate and dispute mistakes
  

Having bad credit doesn't mean you won't qualify for a home loan, but understanding how lenders look at your history can help you take control.

About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelancing, he writes for his local paper, and lives with his two children in Nevada.

About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing, Gil writes for his local paper, and lives with his two children in Nevada.

Share This Article:

Other Recommended New Home Loan Articles

• Adjustable-Rate Bad Credit Mortgages: When Should You Consider an ARM?
• Improving your credit score will increase your chances of getting a new home mortgage.
• The 2009 First Time Home Buyer Tax Credit May Make the Difference between Buying or Renting