They would like to borrow $25 thousand. This is the estimate they have for the work that they are planning to have completed. While this is not a large amount of money it is more than what they can be approved. This is due to a bad credit rating that has been attached to their file. It occurred due to a slow payment situation that developed over 5 years ago with they both lost their jobs.
They have managed to get everything back under control in the ensuing years. They have paid off their loans and their credit cards. In addition, they are back on target with their current mortgage. They cannot understand why they can not get approved for the home improvement loan that they are looking for.
Bad credit ratings tend to hang around for many years and it takes time for those ratings to be cleared from your record once they are attached to a file. Any lender who reviews this file and the bad credit rating will have second thoughts about lending money. The best course of action is to approach your existing mortgage company to determine if they will refinance the existing mortgage.
The existing mortgage company will have on their record that this particular mortgage was in arrears at some point, but then the applicant was able to recover from the situation and repay all interest owing. This is a pretty good record to have and we think that the existing mortgage company should be willing to lend these people a home improvement loan even if they have a bad credit rating.
This is going to take a meeting with the lending officer. They will need to come clean with all of the information concerning their bad credit rating. They will also have to bring copies of all their statements of loans and credit cards. Include any other debt that they may have had to demonstrate what the current balance is on these loans.
A meeting of this sort when you are well prepared should demonstrate to the lending officer that this couple is now a good candidate for a loan. They may demand a slightly higher rate for the new mortgage. This is the price that many people have to pay in order to have a home improvement loan approved and also begin recovering their credit rating.
We hope that this discussion will help many people who are in a similar situation. If you have questions like this, feel free to leave us a comment. Include your questions and we will try to answer it in a future post.
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We think that anyone with bad credit should just focus on paying off their debt instead of trying to borrow more money. You will save a lot in interest payments too which leaves more available for later for your home renovations.