Did you know only 1.6% of the buyers have the perfect 850 credit? In the wake of the pandemic, many lenders have made the credit guidelines stricter. So, don’t be surprised if you come across 760 as the minimum credit benchmark! However, the government loans for low credit scores are not obsolete anymore. More than ever, the lending landscape encourages people to achieve homeownership.
Now, there is a twist in the story. Borrowers have only been concerned about pulling credit scores. If you want to land the perfect home loans for low credit scores in Houston, TX, lenders can help. Congress successfully passed a $2 trillion stimulus package, and 4 million citizens have appealed for loan forbearance due to the troubled economy. The real estate market is currently on the rise again, and the mortgage rates are going up.
This still remains a good time to start research for the home loan and take action. The article discusses essential tips you need to remember about finding a mortgage with a low credit score.
Focus on Your Income More
Trying every possible way to improve your credit score is not everything. Poor credit score might be the reason behind unstable income or unemployment. Credit card agencies have started taking action against consumers’ limits. This indicates the credit card companies’ attempt to put a lid on the defaulted payments. Conventional borrowers who maintain a steady source of income are likely to find viable programs. Lenders, of course, are allowing borrowers with 620 credit scores. This range is considered average or fair as per the FICO scoring model. An excellent credit score qualifies affordable interest rates and loan terms.
However, layoffs and furloughs are the main challenges of the borrowers in 2021. During the mortgage application process, lenders verify your employment status again. If you are unemployed while applying for the mortgage, you will have to wait. This can give you ample time to pull credit scores.
Improving Credit Score in 2021
As you look forward to improving economic circumstances, you can use a new credit card to pull the score. The new card might balance the credit utilization rate, and you need not worry about more serious debt. You can set a reminder to never miss a payment once again. Remember the best interest rates are possible with at least 760 credit scores. You can start saving up for a down payment as early as possible and manage to keep the credit utilization rate less than 10%. Do not close old accounts if your home loan is not approved. This can severely leave an impact on the credit scores.
Qualifying for a bad credit home loan does not require rigorous attention. You can save thousands of dollars and your effort while working on the credit score. Focus on reviewing the report and increase your credit score. A few points can create a huge difference in the home loan rate. So, keep a track of the credit score!