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Can I get a mortgage with bad credit?

Updated: Jan 18, 2022

This is the perfect reason to fix your credit.

Most mortgage lenders have strict guidelines they must adhere to. Unfortunately, if you don’t meet their eligibility requirements, there’s not much you can do to get a home loan until you improve your credit score. But you do have a few mortgage options, even if you have a bad credit score.

“A conventional loan typically requires a minimum credit score of 620.”


An FHA loan allows borrowers to have as low as a 580 with just a minimum 3.5% down payment.

Technically, you could still qualify for an FHA loan with less than a 580, but you’d need to put down at least 10% of the home’s sales price.

Of course, you’ll also need to demonstrate other financial capabilities other than your credit score when applying for a mortgage.

For example, your monthly debts should be no more than 43% of your gross monthly income — this formula is known as your debt to income ratio. Lenders also look at your employment and assets.

In order to qualify for a mortgage without the uncertainty being left on the table, achieve the best interest rate, and least amount of money down, it's best to have a credit score as high as possible. Don't settle for the bottom line.

How can I fix my credit score?

Credit naturally repairs itself over time, usually within around 7 to 10 years. But there are several ways you can help expedite the process while waiting for those items to drop off on their own.

Dispute Inaccuracies

Start by making sure everything listed on your credit report is indeed accurate. If there’s an incorrect item, it’s relatively easy to dispute it with the credit bureaus. The Fair Credit Reporting Act states that any items that can not be verified must be removed from your credit report within 30-45 days.

Having many negative marks on your credit report is one of the main reasons people have bad credit. So it may be worthwhile to enlist the help of a professional credit repair service.

Work on Your Credit Utilization Ratio

Another easy idea is to work on paying off your debt to decrease your credit utilization. This helps both your credit score and your overall loan or credit application.

Get a Secured Credit Card

You probably won’t be approved for an unsecured credit card; however, some banks and credit unions offer secured credit cards. These credit cards allow you to put down a deposit that is equal to your credit limit. That way, the banks aren’t lending you money. You are actually kind of just borrowing from yourself. But, the payments get reported to the credit bureaus.

Bottom Line

With a bad credit score, there are only so many quick fixes you can implement before hitting a wall with your progress. But a credit repair company can help you fully exercise your rights when it comes to removing negative accounts and fixing your bad credit.

Bad credit doesn’t have to make you feel like you’re backed into a corner. You may still have credit options available to you now, and there are also concrete steps you can take to get back on a better financial path.

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