How To Buy A Home With Bad Credit

Is it easy to buy a home with bad credit? No, but it’s not impossible to do so. Before engaging in a search for a home, you should find and review your latest credit report and credit score.

You want to know where you stand as a potential creditworthy borrower. There may be errors on your credit report that you can be easily correct.

Having bad credit adds a significant hurdle. Unless you have substantial liquidity and pay cash for the house in full, you will have to rely on a lender who will provide a mortgage.

Can You Buy A House With Bad Credit? Check Your Credit Score

A credit score reflects your creditworthiness based on an analysis of your credit information provided by the three credit bureaus, resulting in your credit report.

The FICO scoring system ranging from 300-850 remains the predominant model used by financial institutions. Your creditworthiness increases with the higher the score.

1. 800-850 Exceptional 2. 740-799 Very Good 3. 670-739 Good 4. 580-669 Fair 5. 300-579 Poor FICO use five criteria that are proportionally different in value.

FICO Credit Score Ranges Per Experian:

Payment history accounts for 35% of your credit score. It carries the most significant weight in your score. This is one area in which you have considerable control.

Payment History  (35%)

Amounts Owed  (30%)

Having a  30% or higher utilization ratio tells the lender you are using too much credit, impacting your score. I would stay in the mid-20s range so as not to hit the 30% level.

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