Mortgages for bad credit history

What are mortgages for bad credit history? There are many explanations for this but I have outlined few things which will help majority of borrowers in almost in any situation.  If you are reading this in 2012 than its even more relevant to your needs, because the economy has done horrendous damage to the credit reports in the past 4 years since 2008.

Given below are some guidelines that constitutes this vague and general  outline used by lending community. There are no hard and fast rules and lines drawn in the sand, but just basic guidelines which will help you evaluate your own situation.

• Credit scores below 620
• Mortgage delinquencies in the past 12 months
• Foreclosure in the past 24 months
• Bankruptcy discharge in last 36 months
• Debt to income ratios higher than 50 percent
• No cash reserves and savings.

After 2008 these guidelines are lot more strict than prior to the 2006 lending world where things were much easier.  Lenders  want to see if you have cash reserves of few months to cover mortgage payments should the need arise. Few missed payments don’t count as much but a regular pattern of non payments will. The rates and interest charges are determined by the FICO scores on the credit scores.

How to improve your credit scores

Paying on time

The best and most effective method is by far the common sense. Paying bills of time can raise your credit scores over few months. Non payment of 30 days on a mortgage can devastate those results by 30-50 points. Credit card bills should also be paid on time. This is by far the most difficult , yet the easiest method of raising credit scores.

Lower balances

Cutting down balances on credit cards to 50 percent of loan limits will help improve credit scores and mortgages for bad credit history. High balances definitely lower your credit scores by many points.

Too many Negative accounts

If your credit report only carries negative accounts your credit scores will suffer. So its important to open new accounts with secured credit cards to balance the act. These new accounts should be paid on time and within few months they will boost credit scores and improve credit profiles tremendously.

Getting mortgages for bad credit history should be treated as a longer term project. Few months of works should eventually pay off when done correctly. Meanwhile a strict credit management plan should be in place for monthly progress. Every month this plan should be reviewed, and the progress checked. Getting to see your credit report every month is one good way to check on the progress made. If some items are improving than more focus should be applied on that side.

Bad Credit mortgages