Get a mortgage despite poor credit

Despite a housing boom in recent years that saw seemingly everyone get approved for a mortgage, some people with less than stellar credit histories are still approaching their mortgage application with a degree of trepidation. Fearful of what they might discover, those in such a situation can take several steps before beginning the process that could make things go more smoothly once they begin contacting lenders.

Get your credit report, and work on any discrepancies. Just because an item appears on your credit report, that doesn’t necessarily make it part of your history. Obtain a copy of your report and examine it carefully. Any discrepancies should be taken care of. In addition, if there are any items on the report currently in collections, try and pay those down before applying for a loan. Too often couples apply for a loan only to have incorrect information on their report result in that application being denied.

Try to increase your credit limits. While it might seem puzzling for people with an admittedly troubled credit history to ask for more credit, should you be granted your requested increase it will indicate to prospective lenders that your current creditors are confident you have turned the corner and are beginning to re-establish yourself as a person worthy of receiving a loan.

Try to erase existing debts. You won’t need to erase all debt, but decreasing your debt to a more manageable figure will encourage lenders to take a longer look at your application. Applicants who already have a mountain of debt to overcome are less likely to be given a loan. However, if your debt is relatively small and manageable, and you’ve shown an ability to consistently pay it down, your application will become more attractive to prospective lenders.

Keep things as stable as possible. If you have been sizing up a career change, you might want to consider holding off on it until you’ve completed the application process and actually been approved for a loan. Like any lender, mortgage lenders want someone with a stable life and steady career, as such borrowers are more likely to be able to pay their debt. Lots of change before submitting an application indicates, fairly or not, that your life is in a certain degree of disarray, which will not help your cause.

Don’t open any new accounts. New accounts, be they with a department store, car dealer or any other lender, indicate that you might be putting yourself in another bad situation. Steer clear of opening any new accounts and using credit as a way out of any financial jams you might find yourself in.