1. Start paying your bills on time NOW. When you try to get a loan, the lender will definitely take a look at your credit history. They will not only consider your credit score, they will also look at the details of your credit report. They will look at whether you have been paying your bills on time lately. If you can establish even a few months history of paying bills on time, it will really help you to build trust with the lender. If you pay your bills on time for six months or more, it will help significantly, even if you still have a low credit score.
On the other hand, if the lender looks at your credit report and finds that you paid bills late last month, it will be really difficult to get approved for a loan.
2. Start saving a down payment. When buying a house with bad credit, you’re going to need a down payment that’s significantly larger than you would need if you have great credit. This is obviously because you are a higher risk for the lender.
In most cases, you will need to come up with a down payment that’s at least 20% of the value of the home you’re trying to buy. If your credit is severely damaged, you may be asked to provide a down payment that’s up to 50% of the home’s value.
3. Fix your credit. After you have gone through this process once, chances are that you will want to avoid going through it again. You will have to pay more interest than you would if you had great credit and you will pay a lot more in fees.
If you start paying your bills on time now, it will really help your credit score. Additionally, it will be a huge help if you pay down the balances on your credit cards. Unfortunately, no credit check home loans don’t exist so if you want to buy a home, credit is going to be a factor.