The Finance Blogger

Home Loans for People With Bad Credit

Home Loans for People With Bad CreditHome loans for people with bad credit is always an interesting subject and our next question from one of our readers is exactly on this subject concerns getting a home loan when you have a bad credit rating.  To summarize, our readers  credit rating is below 500 and their  debt to income level is only .3.  They had some trouble a while back with a company so they refused to pay them and they sent a notice to the credit agencies which caused their credit rating to nosedive.

They indicate that they never missed a payment and now have this bad credit rating and want to get a home loan. This is really an unfortunate situation for the people who sent in this question.

Home Loans for People With Bad Credit

This is what happened and let it be a lesson to many other people as well. They received a product from a less than reputable company who did not take returns. The couple was not satisfied with the product and wanted to return it and not complete all of their payments. The company referred to their policy of no returns and tried to collect the remaining money from their customer.

When they refused to pay, two things happened. One it went to small claims court and the couple eventually won their case. Secondly the company in the process of collection also filed a report to the credit agency and as a result this couple who previously had a stellar rating now have a bad credit rating.

What Can They Do

There is not a lot they can do. The company they were dealing with is not going to take the time to send a letter to the credit rating agencies. All they can do is be up front with any loan company and explain the situation, show the court order and demonstrate to the best of their ability what actually happened.

Some loan managers who are willing to take the time to read this material may give them a loan at decent interest rates. Otherwise, loan managers will either decline to lend them money or if they do lend them money , rates will be higher than the usual market rate.

Long Term Solution

On a longer term basis they need to re-establish their excellent record by borrowing money and then repaying the loan on time without missing any payments at all or being late on any payment. Once they have a loan or two with this kind of perfect payment record, they will find that loan managers will take a more positive approach to lending them money.

In addition, if they have a lot of credit cards or are thinking about applying for credit cards or take advantage of some of the credit card applications that are sent to them in the mail, DON’T. This is another sure way to lower your credit rating. More credit cards in your name is more potential debt which the credit rating agencies take a dim view of.

For more information about Home Loans for People With Bad Credit, click here.

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One Response to “Home Loans for People With Bad Credit”

  1. A low credit rating can mean higher interest charges and maybe admin fees as well. Guard your credit rating like you would guard the kids

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