My Credit Is Bad! Can I Still Get A Mortgage?

Having bad credit can mean it's harder to qualify, but even buyers with blemished credit can still obtain a home loan.

Be aware that all information will be considered by the bank when you apply for a mortgage. These factors may include late 

credit payments, unpaid taxes, or even a judgment against the buyer. Minor credit blemishes may not be a critical factor. 

Prospective home buyers who have major financial problems on their record might still be able to qualify for a loan, but they can expect a higher interest rate and/or a bigger down payment.

Before applying for a mortgage loan take these steps. First, obtain a detailed credit report from one of the three major credit reporting agencies. Even better is to get a report from all three, to make sure you get a complete picture; not all creditors or lenders report their credit information to the same agencies. Federal law now requires the agencies to give you a free copy of your credit report once per year. You can reach TRW at (800) 392-1122, Equifax at (800) 685-1111, and Trans Union at (800) 408-1050. You can get reports more than once a year for a small fee.

Secondly, a buyer will want to provide evidence of other bills that have been paid on time but may not be reported to the credit agencies, such as timely rent payment, utility bills, and so on.

Third, a buyer will want to be able to explain in detail the reasons for any reported late payments to the lender. This is important, as the buyer wants to make sure the lender knows everything necessary to process the loan, and not appear to be hiding information. 

Often lenders know that there are problems that can occur such as the loss of a job, a serious illness, or divorce. If a buyer has a series of late payments, however, he or she might wait to buy a home until there is a longer record of current payments, such as six months, appearing on their credit report. A real estate agent can provide guidance in this area, so be sure to discuss with them.

Even with a spotty financial history, it's possible to purchase a home. There are lenders and real estate agents who are happy to help you find a solution.

Greg Cryns is the owner of Flat Fee Real Estate Guide - http://www.flatfeerealestateguide.com