Are you planning to take the next leap forward to becoming a homeowner however you are taken aback because of bad credit?
Having a bad credit can indeed hurt your capability to apply for various loans. However, these days, there are sprouting specialist lenders who can offer loans to home buyers with bad credit. These lenders will look beyond your credit history and look further into your capacity to pay. Regardless, it is always advisable to know why you are in a bad credit standing and see if you can still repair some of the damage to improve your standing.
There are two points that financial institutions consider when applying for a loan – your income and your credit history.
What should you do to get started? Here are tips to help you apply for a loan despite bad credit.
Before you even sign that application form or talk to another lending institution, seek for a copy of your credit file. Understand why you ended up with a bad standing in the first place.
There are numerous factors that may have to lead your credit standing to bad credit. Below are a few of the factors to look at.
You want to make sure that you know your credit history. All home loan lenders will look closely at this, so you want to discuss negative marks on your file with no qualms.
Important:
Know where to access your credit report.
Lenders will ask you what steps you have taken to repair your credit standing. Naturally, you will want to pay outstanding debts. Contact companies listed with late payments and see if they can remove negative report. Some companies can do that for you especially if you have built a good rapport with the company.
Payoff existing debts. Lenders will look into your current credit accounts like your credit card bills and personal loans. It is important that you don’t have any existing loans when applying for a home loan. Payoff all existing debts for a better chance of approval.
Consider a credit repair service. A credit repair specialist can help you in a number of ways. They can review your credit report and help remove negative listings in your credit history if those negative listings are not adherent to laws. This can greatly improve your credit standing.
There are specialized lenders in Australia who offer bad credit home loans. These lenders will look into your file and understand why you ended up in bad credit. Bad credit standing is, in many cases, reflective of many factors. It could be a result of lifestyle change or unwanted circumstances such as sickness or divorce. Be honest when these lenders ask for an explanation.
They will compare your credit standing against your income. It helps to know that you have a good and stable source of income. Note that a higher income can sometimes override bad credit depending on how the lender views it.
Your credit report will include all previous inquiries for past loan applications. Take careful steps when inquiring about home loans especially when you already have a bad credit standing in your record. Too many inquiries in a little space of time can lead to raised red flags to lenders.
There are only two major providers for LMI in Australia – Genworth, and QBE. These major providers are very strict when it comes to evaluating loans which in many cases leads to rejected loans. Specialized lenders have their own LMI alternative so that you have better chances of getting an approval.
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