First, know a good and bad credit score. Lenders get a full credit report when they query Equifax, TransUnion, or Experian about your payment history, debt load, unused credit, and more.
Credit score ranges vary, but generally speaking there are five tiers.– Excellent: 800 and above– Very Good: 740-799– Good: 670-739– Fair: 580-669– Poor: 580 and below
Even simple solutions can help you get a mortgage. Six tips for homebuyers with poor credit.
Save for a Larger Down PaymentSometimes your credit is only part of the problem. What can make it even harder are the debt-to-income ratio rules that lenders often use.
Borrow PrivatelyThe people who know you best would obviously know better than a bank if you’re a good credit risk — and they may be more forgiving of an occasional late payment.
Get a Co-SignerIf you’ve already approached someone close to you to help, but they’re uncomfortable actually lending you the money, there’s another option: getting them to co-sign your loan.
Look into an FHA LoanBanks hold most conventional mortgages. The Federal Housing Administration (FHA) lends to first-time homebuyers, those with poor or no credit, and those with low savings or income.
Veterans: Consider a VA LoanFor veterans with lower credit scores who are ready to settle down, a Veterans Affairs (VA) loan might be a good option.