- It is crucial every person checks their credit score before applying for any loan. Taking the time to dispute discrepancies on a report is an excellent way to add a few points to a credit score, which will ultimately increase the chance of being approved for a loan.
- Check around and research any bank or agency that offers home loans for bad credit. There are too many shady companies willing to charge a small fortune in fees to those who feel they cannot get a loan any other way. Check with the Better Business Bureau, the internet and friends and family members who have dealt with a particular bank.
- Check with local and state agencies that specialize in home loans for those who would not otherwise qualify for a standard loan. FHA loans are an option as well as loans for homes that are in rural areas.
- Make a concerted effort to come up with a substantial down payment. Many lenders will underwrite home loans for bad credit with a 20 percent down payment. Borrowed down payments are acceptable. However, the money needs to sit in the bank for at least three months.
- Check with a credit union. Local credit unions are more apt to lend to their account holders who are looking to buy a home in the area.
While shopping around for a loan, it is imperative a person makes a concerted effort to increase an existing score. Every point helps. Learn more about what needs to be done in order to do this. If it is proving difficult to obtain a loan in most markets, it wouldn’t hurt to ask a trusted friend or relative to cosign the loan.