Mortgages for People with Bad Credit: Myths and Facts
Getting a mortgage with bad credit is usually intertwined with a great deal of myths that might be hard to debunk at first. We hope this article will help you understand the truth about applying for mortgages for people with bad credit and convey the idea that improving your credit score should be the first step before your consider making this vital financial decision.
Myth: Getting mortgage loans with bad credit is easier if you open up several new credit accounts and pay them off religiously.
Fact: Opening up new credit card accounts will not improve your chances of landing mortgages for people with bad credit; it can only worsen your credit score if you don’t take care of your old debts. On the other hand, paying off old credit cards and reducing your available credit limits will help improve your credit rating allowing you to get an improved interest rate.
Myth: Credit repair service can magically restore your credit score and help secure mortgages for people with bad credit.
Fact: Internet is flooded with credit repair services making unrealistic promises of magic credit restoration. In reality, only you can improve your credit ratings by diligently paying off all outstanding debts, making all monthly payments on time and reducing unnecessary credit limits. Most credit repair services can charge hefty service fees that should have been more effectively applied to your current debts.
Myth: In order to get mortgages for people with bad credit you need to apply to as many lenders as possible.
Fact: While shopping around for getting a mortgage with bad credit might seem like a good idea, officially applying for many mortgages for people with bad credit at one time is not. Every time you authorize your lenders to make credit inquiries, that results in a number of unnecessary inquiry trails that can hurt your credit even further. A large number of credit inquiries done in a shorter period of time might indicate you are having financial difficulties or you are applying for more debt than you can handle.