The Bad Credit Mortgage Process
The first thing to do when trying to find a bad credit
mortgage is to weed out all the banks and mortgage companies
which are not likely to do business with you. It’s
very likely that your “neighborhood” banker
will not take you seriously, and will give you the following
piece of advice, “Save up enough to make a big
down payment, and take a few years to clean up your
credit then come back and see me.”
Frustrating advice for somebody who wants to buy a
home today for that banker believes you are unworthy
of being given a loan. The first step in the process
is to ignore that person.
There are lenders who specialize in making poor credit
mortgages. Compile a list of them and research them.
Find out what is required, the costs you are likely
to incur, and the number of consumer complaints which
have been lodged about them.
Next, find out just how bad your credit really is.
Obtain a copy of your credit report and review it in
detail. Anything with a credit score of less than 620
is considered bad credit. If there is any item on the
report that is questionable, you have the right to dispute
These credit agencies are not perfect, they make mistakes,
and they are obligated to correct them. To get an incorrect
item off of your report, send a signed letter to the
agency with your full name, mailing address, date of
birth, social security number, name of the creditor
and account number, and reason for your disagreement.
Request that the item be removed and that you be issued
an updated report.
Don’t take a shotgun approach and apply to every
mortgage lender you can find. Not only would you run
the risk of getting stuck with lots of application fees,
each time a credit report is requested, it is recorded
on your credit report. Having too many requests in a
short period of time is considered a negative. Instead,
make a short list of three or four lenders or brokers
who you feel comfortable with and start from there.