While there's a stigma attached to it, a bad credit score doesn't automatically mean that a person is financially irresponsible. Sometimes, it's caused by certain factors that are out of one's control, such as the rising cost of living.
Unfortunately, having a low credit score tells private lenders for real estate loans that you're a high-risk borrower. There's a huge probability that they'll deny your application. But, while it limits your options, there are still ways to receive financing for your dream home. Here are some tips that you can do to get around your situation.
Look into your score to see what you can do to improve it. Start by requesting your record from the three credit reporting companies: Equifax, Experian, and TransUnion.
Once you have your credit report, search for accounts that indicate late payments or unpaid bills. You should also check the information for any inaccuracy. You'll be provided with details about where to send a dispute if you spot errors.
As much as possible, clean up at least a portion of your credit to increase the probability of having your mortgage application approved. If your score plummeted due to unpaid debts, settling them will help you do some damage control.
Traditional money lenders, such as credit unions and banks, would like to see if you can commit to your arrangement. You can prove this in the form of a large down payment.
By putting a significant amount of down payment, you reduce the risk for the lender as they're set to lose less money if ever you default. It also helps offset your poor credit score.
Most lenders require proof of your capability to repay them. With your bad credit score, it'd be challenging for you. Why not consider companies that accept collaterals?
Hard money lenders, for example, are less concerned about your financial standing. If anything happens that prevents you from repaying the loan, they'll get their cash back by selling the collateral.
A bad credit score shouldn't prevent you from purchasing a home. While it can make it difficult for you to receive approval for a loan, there are private lenders in Texas that are willing to give you a chance. With a little effort and patience, you can overcome your financial situation and get your hands on that dream house.