When applying for a home loan you should always know your credit score. This is one of the first things that any lending institution will check. They will have to get your permission to check your credit and will check it through all three credit bureaus. The three credit bureaus are Equifax, TransUnion and Experian. While most lenders will not lend to someone with bad credit, there are many lenders who specialize in helping borrowers get a loan even thought their credit is bad. These lenders have helped people with bad credit to get the right home loan at an affordable interest rate.
It is very important to understand how your credit score is determined. It is also important do know how your credit score is used. The three credit bureaus calculate their scores based on a number of factors. These factors include your payment history, the amount of money going out to pay the debts your already have, the length of time you will be paying off your debts and the number of new accounts you hold. The longer you have had a good credit history the higher your credit score will be. Lenders usually work with an average of your three scores to determine whether they will make you a loan.
Credit scores range from 340 to 850. Borrowers with scores of 700 or higher tend to receive loans with a better interest rate than those with a lower credit score. Do not be discouraged if your credit score is not high. Some lenders today provide a wide range of options including a no credit check mortgage. If you have no credit history or are applying for a no credit check mortgage, it is particularly important that you talk with your loan officer at the beginning of the process. This will save you time, money and a lot of frustration in the long run.
When applying for a no credit check mortgage the lenders will still check your credit score but they will weigh other factors into the mix. You must be able to verify your income with a W-2 or 1099. You will also be asked to provide personal references and certain other documentation. If this can be done you may qualify for a no credit check mortgage. You may not enjoy the same loan options as a borrower with excellent credit but you can get a home loan that will work for you.
Making mortgage loans to borrowers with a low credit score is actually profitable to the lender. Lenders tend to profit from working the borrowers who have been turned for a loan somewhere else. Finding lenders who offer no credit check mortgages is easy. Go online or check with mortgage brokers, banks and other lending institutions. Do not forget about your personal referrals. They are important.
Once you qualify and close your loan you have an outstanding opportunity to rebuild your credit. Be sure to honor the repayment requirements to help improve your credit score. Make your payments on time and never miss a payment.