What is bad credit? Home lenders come up with their own version of credit score requirements when it comes to mortgages. This means when a lender rejects your application for having a credit score of 590, another one may accept. As interesting as it sounds, you should dig more into the house loans for bad credit in Aurora, IL . When your credit score is seemingly low, you might think getting the approval for a VA home loan is hard to get. Of course, there are lenders willing to offer to finance with a bad credit score. All you have to do is make sure all your energy remains on increasing the credit.
But do not worry about whether you can or cannot get a home loan with bad credit. There is no particular credit range that might instantly disqualify you from landing a mortgage. As long as your credit score is between 300 and 850, you have a shot at it. Lenders typically use the FICO scoring model, and credit scores above 715 are considered a good credit range.
FHA, VA, and USDA loans are widely popular for being federally-backed house loans for bad credit in Aurora, IL. You might be eligible for any of these loans, but you should work on your credit scores before applying. So, let’s go over the following tips!
How to Improve Credit Score before You Apply
The first and foremost thing to do is that you should focus on the credit utilization ratio. As long as you are paying down the outstanding balance and bringing it down to 25%, you should keep at it. Remember, credit card debt takes up 30% of the entire FICO score. After taking care of the credit card debt, you need to start paying down bills on time. You cannot miss out on the bill because the payment history takes up 35% of the credit score. It plays a great deal in deciding on your credit score. If you add more debt to the credit report, things can significantly go down.
On the other hand, you should stay away from applying for a new credit line. With too many credit lines, things get messier. Also, you need to dispute accounts that do not align with the credit reporting agency. You can take it further by finding someone with a credit card and asking him/her to add you as an authorized user. Meanwhile, you can pay up for eliminating derogatory accounts from the report.
