Having bad credit feels so limiting- is it preventing you from achieving your goal of home ownership? Whatever your situation- whether you just got your first credit card or have a history of not being able to pay on time- it can be discouraging when trying to make big purchases. But bad credit doesn’t have to be the end of your story! There are ways to bring up your score and there are loan programs for scores as low as 580. If you’re unsure of your credit score, we pull it when putting together your pre-approval, so we can take a look at it together and see what you qualify for.
Is it even Possible?
At Gagliano Mortgage, we may be able to help you despite your credit score. It is possible to buy a home with a low credit score, but that generally comes with a higher interest rate. Unfortunately, we can’t take any and every credit score, but we are able to help the best we can. There are loan programs available for bad credit situations, so it’s still wise to consult Gagliano Mortgage when you’re considering options for home loans in Birmingham, AL. FHA, VA, and USDA loans are good places to start as a first time home buyer. We can walk through these low credit loans in more detail together and in the meantime, you can start saving for your down payment (if you haven’t already).
How to improve your credit score
1. Make frequent payments
If you are able to make small payments — often called micropayments — throughout the month, that can help keep your credit card balances down.
2. Pull a credit report and check for errors
Understanding your credit history is key to understanding what’s affecting your credit score. Getting your credit report can help you figure out any discrepancies so you can report errors, pay off debts, and boost your score.
Did you know you’re entitled to a free credit report from the three major credit bureaus– Equifax, Experian and TransUnion– every year? Go to AnnualCreditReport.com.
3. Keep credit cards open
This is a good tip if you are trying to rapidly raise your score. According to NerdWallet, closing credit cards can temporarily lower your score because you lose that card’s credit limit when your overall credit utilization is calculated. Keep the card open and use it occasionally.
4. Get a mix of credit
If you have only credit cards or have only loans, consider diversifying your types of credit. Try to have both installment accounts and revolving credit as this can boost your perceived creditworthiness.
What NOT to do before getting a mortgage loan
Taking certain actions right before applying for a mortgage or during the homebuying process can mess with your credit score. Thankfully these actions are avoidable for most.
- Don’t make big purchases that require credit and/or financing- furniture, appliances, vehicles
- Don’t apply for a new credit card or cancel current ones
- Don’t forget about outstanding medical bills
- Don’t forget to make your minimum payments
If you really want to become a homeowner, but feel like your credit score is going to hold you back, let’s talk. You might be surprised at how much we are able to help. If you think about it, the worst thing that can happen is we let you know you’re not able to get a loan and then you can work on boosting your score. There’s nothing to lose by contacting us! Give us a call at (205) 236-5667. Gagliano Mortgage is happy to work through the available programs for home loans in Birmingham, AL and find the one that works best for your situation.
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