Buying A Home? Signs That You Need A Bad Credit Mortgage

Posted on Oct 18 2013 - 11:22am by Charmaine Mitchell


Before you start the home buying process, you need to know where your credit stands. Getting a bad credit mortgage is a little bit different from getting a mortgage for people with good credit, so you need to be prepared! You can pull a copy of your credit report for free and check it over. You can also request your credit score, which is an overall view of how creditworthy you are. As you look over your credit report and prepare to get a mortgage, look for these signs.

Calls from Collectors

If you or family members are getting calls from collection agencies, you may have something on your credit report that makes you a credit risk. Unfortunately, sometimes accounts get sent to collections when you’ve actually paid them off. For an easier chance at guaranteed mortgage approval, clear up these misunderstandings and get current on any accounts that are in collections.

Accounts Listed in Collections or Default

Look over your credit report for account that are listed as in default or in collection. These accounts, until they are made current, are a continuous drain on your credit score. Go through and make a list of any and all accounts that are not current. Call each creditor on your list and ask what you need to do to make your account with them in good standing. Creditors are often willing to negotiate on payments and even the total amount you owe if you have been in collections for a while. They figure that getting something from you is better than nothing! This may still ding your credit score, but it’s better than a constant drain on your credit report.

Maxed-Out Credit Lines

You don’t want to wait until your private mortgage lender pulls your credit report to know how much you owe on your credit cards. Before going to your Toronto mortgage broker, know exactly how much debt you have on credit cards and how much available credit you have. If you have too much debt, that’s already bad for your credit. If you have a lot of debt relative to how much credit you have, that’s even worse. If you have a lot of debt or a lot of debt relative to your available credit, you may need to look into lenders who can help you with qualifying for a mortgage with bad credit.

Too Many Credit Cards

Quick, how many credit cards do you have? If you couldn’t give a definitive answer to that within a couple seconds, you might be in trouble. If you don’t know how many credit cards you have, you might have cards out there with balances that you’re not paying. When you get your credit report, go through and make sure that you have a complete list of credit cards under your name. If any have balances that you don’t recognize, call to get the full story.Close ones you don’t need.

If you have any of these warning signs, don’t worry! Getting a mortgage is still possible if you follow these straightforward steps.

Photo Credit: Flickr/Tobias

About the Author

Charmaine Mitchell is a credit specialist working with Bad Credit Mortgage Toronto. Her goal is to help families from all walks of life be able to afford the home of their dreams. She aims to share helpful and actionable advice that you can use to boost your credit and qualify for a mortgage.