Things You'll Need:
- Computer with online access
- Email address
- Phone
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Step 1
Check your credit scores free and repair your credit. There are several places online you can get your free credit report. Some are on a trial basis. By reviewing your credit report and credit score, you can check for mistakes and get them corrected to improve your score. It’s important to find out what your credit scores are, so you’ll know what bad credit mortgage loans you may be eligible for as you do your research. For websites that offer credit scores free, check out the Resources section at the end of this article.
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Step 2
Improve your credit score. While trying to fix any inaccuracies on your credit report, you can also take actions to better your score. For example, pay all your bills on time and settle any late outstanding payments. You can also get a secured credit card, which is tied to a bank deposit account. Use it sparingly and pay off the balance in full each month to improve your credit rating.
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Step 3
Create a monthly budget. Not only will a budget help you make smart financial decisions, but you’ll need it to evaluate your eligibility for a bad credit mortgage loan. Generally, lenders want to see your potential mortgage payment to be less than 29% of your monthly income. Determine where you may be able to lower your monthly expenses like your credit cards. When possible, increase your income and savings to improve your debt to income ratio.
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Step 4
Reduce monthly expenses and save money for a down payment. It may be easier said than done, but with careful budgeting and trimming your unnecessary expenses, you may be able to free up extra cash to pay down monthly debts and save for a down payment. Having lower monthly debt expenses gives the lender assurance that you can keep up with a new mortgage loan obligation. When you have more money for a larger down payment, you’ll need a smaller mortgage loan, which makes you less of a risk to the lender. Therefore, you would be more likely to get a bad credit mortgage loan.
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Step 5
Contact several bad credit mortgage loan lenders online. There are websites like LendingTree that make it simple to search under bad credit loans, and contact several brokers at once with a short form. Be ready to ask questions when they contact you with mortgage loan quotes. Find out if you are eligible given your credit history and under what rates, fees, and terms.
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Step 6
Compare mortgage loan offers for bad credit. Carefully review the different loan quotes once you have all the information from several lenders. Try to gather a few potential sources that will give you a loan, so you can evaluate your options from a few choices. While your rates will be higher than someone with good credit, it’s important to be careful with predatory lenders who may ask for extremely high rates and fees in order to get you a bad credit mortgage loan.
