Bad Credit: What Happened and Why
By Karen LawsonMortgage Credit Problems Columnist
Having bad credit isn't the end of the line financially. It's possible to get a bad credit mortgage, and to qualify for other types of credit. The important thing about bad credit is learning from the past and taking steps to avoid bad credit in the future. Here are some steps that can help people with bad credit qualify for a mortgage loan at reasonable rates.
Improving Bad Credit: How to Get There from Here
It's a good idea to do some advance research and shop for a bad credit mortgage loan before looking for a home. Homebuyers with bad credit may assume that they only qualify for bad credit mortgage loans with very high finance charges. This type of mortgage can lead to more financial trouble if the loan terms aren't affordable, or are subject to rapidly increasing rates and payments.
Potential homeowners should obtain their credit scores and credit reports from the three major credit bureaus at annualcreditreport.com. Consumers are entitled to a free copy of their credit reports once a year. Credit scores are also available for a small fee; knowing credit scores in advance can help when negotiating mortgage terms.
Dig Deeper: How and Why Bad Credit Happens to Good People
A major factor in getting bad credit is uncontrolled spending. Typically, compulsive spending can be caused by stress or other negative influences. Understanding the reasons for getting deeply into debt can help prevent future problems. Of course, bad credit can occur after an emergency or catastrophic event. Reputable non-profit credit counseling agencies can help people with bad credit negotiate affordable repayment plans and develop a household budget and savings plan. Getting on track financially is the first step toward getting a bad credit home loan.
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
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