DC Fawcett Real Estate Methods Of Getting Loan Approval With A Low Credit Score
Many investors have presumed that a bad credit report will not help them to get mortgage; but that’s not true. DC Fawcett has written about how to get financing even with a bad credit score in this article.
- Investors should have a positive mindset that their loan will be approved. There are some exceptional lenders who will review your credit report and financial overview. These lenders may sanction you a loan. These lenders are called non-conforming lenders.
- The investor should put some extra effort and improve their credit score and try to pay all their debts which are due.
When do you say a credit score is bad?
- Arrears is called missed payments, the lender will pay most of his attention on the number of missed payments.
- Relationship with lender should be good and cordial in the past; if there was some bitter experience he may not approve loan.
- Unpaid bills or tax is documented; these are not mentioned in the credit file.
What does a credit file contain?
- Date of birth
- Address of the borrower
- Loans availed last 5 years
- Negative history against your file if any
The following are the ways to get financing with a bad credit score
- Credit file: Take your credit file to the lender to know his opinion. A credit file will have the current credit limit information, outstanding dues, number of credit cards you own, and late payment report.
- Make sure that your existing debts are paid on time and curtail yourself from applying for new loans. You can re-modify the already existing loan plans in such a way that you can make payments on time.
- Visit a licensed mortgage broker to discuss how the loan can be processed; what type of loan will be applicable in addition to the outstanding dues. These brokers who are having wide knowledge about real estate will help you out on how to get your loan approved with a bad credit report.
- Now it’s time to visit non-conforming lenders who are concerned in giving loans for investors with bad credit score alone. They scrutinize your report to know how long you had been affected by bad credit score.
- Bad credit score may be due to a life event that has traumatized the investor. The lender will help you in providing loan which will be applicable as per your credit report.
The consolidated loan debts like credit card payments or personal loans should be separate from mortgage loans. The rate of interest differs as well as time period to repay the debt.
The investor should review whether he is getting better home loan deals over a period of time, otherwise refinancing is a bad option. HELOC schemes are not ideal for these types of investors as there is a liberty to withdraw money in lump which will make the investor to spend the money.
DC Fawcett Real Estate Tips To How To Rectify The Mistakes In The Credit Report?
The credit report plays an important role during mortgage approval and for other real estate purposes. DC Fawcett Real Estate In that case, the credit report should be perfect. If there are any errors in the credit report, it is our prime duty to rectify it as soon as possible.
DC Fawcett Reviews lists the possible solutions
that will fix the errors in the credit report.
- There are 2 ways by which the errors can be fixed. The first way is to approach the credit reporting agency; they will guide you and fix the errors.
- The other way is meeting the creditor who committed the error. Both approaches work at its best and investor can choose any one approach.
- The first thing is you have to check out what error it is by looking at the recent copy of the credit report.
- You can get a copy of the credit report from credit bureaus or download from government aided sites. The investor is allowed to get a free copy of the credit report per year.
- The next job of the investor is to collect the evidence that will help in fixing the error. Also he should be responsible enough to have copies of the related documents that supports in making the necessary changes in the credit report.
- Take sufficient number of photocopies as you should not submit the originals of these documents.
Beware of scammers:
who pretend themselves as members of credit bureaus and ask original documents. The credit bureaus request the investors to submit the necessary photocopies for making required changes. The errors can be clerical while recording payments or misinterpreting social security number or when you have experienced scam.
After gathering all the information, the investors have to write a formal letter to the credit bureau with all the supported documents enclosed. The letter should be in requesting tone, your letter should also contain the following important information.
- The investor’s full name, address, date of birth, and Social Security Number
- Include both residential address; the currently residing and the permanent address
- The creditor’s name and details of the account (specify the account number and when the account was started)
- Briefly explain about the necessary changes to be made in the credit report.
- Details of the enclosed documents.
You can e-mail or send the letter via a courier. The credit bureau will take time to investigate and will respond in 30 days. The result of the report will be informed later. It is better to intimate the creditor who committed the error that you have contacted the credit bureau regarding the changes to be made in the credit report.
The investor can also request the creditor to make those changes on the safer side. Send the same information to the creditor which you sent already to the credit reporting agency.
After 2 weeks, you can contact the creditor to check whether the changes have been made or not. Since he is the root cause, he must rectify the errors first. Make sure that no such mistakes happen in future. In case you have misplaced the supporting documents, the credit report agency will have a copy of it and you can claim your copy.
DC Fawcett Reviews How online loans and co-signing helps investors with low credit score?
Co-signing actually has many drawbacks apart from shouldering the entire responsibility of repaying; DC Fawcett Reviews the mortgage lender will not approve loans for co-signer perhaps he is already burned with another loan.
The co-signer cannot avail money for personal use using mortgage or any type of loan during this period. Co-signers just make the deal more interesting for a lender and qualifying for a loan is easier.
Income also plays a major role while getting a loan. It acts as a deciding factor whether to sanction the loan or not as the lender makes a judgement on the borrower just by looking at your income. The income factor is directly related to repayment.
If your income is low, you will not be able to pay is the decision made. But in co-signing, the co-signers income is also included which makes the lender to offer loan.
DC Fawcett put forth his suggestions about being a co-signer, what are the drawbacks and struggles he has to face in this article. Anyone can be a co-signer. Usually the borrower can ask his / her family members, friends to be the co-signer.
- If you don’t find anyone supporting your thought, then the next option is to find a third party (who is not related to you).
- The co-designer should not be a newcomer; he should be an experienced borrower as well as rich so as to support you financially throughout the process. Finding a co-signer is difficult as it’s a huge favor you put forth to them.
- If you can’t find any, then borrow less initially with your credit score. Then improve your credit score gradually so that you can borrow a substantial amount.
- If the co-signer as well the first borrower fails to pay, the credit score is affected. In turn, the credit score of the co-signer also affects in this process due to payment default. You can contact credit unions or small regional banks to check if anyone can be your co-signer.
DC Fawcett has written his review on how online loans help investors with bad credit score as well as the cons of using it.
- Online loans have just emerged into the real estate; they are gaining the attention of investors slowly. There are many good online lenders as well as scammers who pretend themselves as lenders and cheat the investors.
- You get to know whether your loan is approved or not instantly. If you are approved, the lender will quickly respond with how much loan you are sanctioned. To avoid lengthy procedures and for quick response, investors prefer online loans.
- They charge less rate of interest when compared to conventional loans and in turn you save plenty of money. The maximum time is 10 to 15 minutes to finish the process.
- You need to provide your personal information like social security number and the address you are currently residing in. apart from that, your income and job details are to be given.
While you browse through you may come across payday loans, which should be avoided at any cost. These loans charge excess debt and offer loans for a month or a week only. They levy high rate of interest.
DC Fawcett Virtual Wholesaling Tips How To Increase The Credit Score?
DC Fawcett discusses about different types of credit scores and review on how to improve the credit score. The credit score varies from 300 to 900, depending on the credit score your loan is either approved or rejected.
When your score is between 300 and 580, it’s very rare that your loan gets approved. Even if it’s approved, you will be paying high rate of interest. If the score is between 581 and 650, there are chances of loan getting approved although rate of interest is high. 651 to 710 – the loan is approved and fair amount of interest is levied.
The scores between 711 and 750 are crucial where you find majority of investors competing and rate of interest is less. From 751 to 900, it is considered to be excellent and your loan is approved with the lowest rate of interest.
Thus investors can infer that credit plays an important role in loan approval. Credit score also decides the amount you pay as interest. So you can either save if your score is high, but you will spend a lot if your score is low.
There are certain guidelines to be followed by every investor to improve the credit score:
- Get your credit report every year and investors will anyway get a free copy once in a year.
- Rectify the errors then and there and take quick action by informing the credit reporting agency and the creditor.
- Pay your bills on time and maintain a clean record, set reminders for your deadlines so that you don’t miss out.
- Make the balance payments and outstanding dues if any mentioned in the credit report. These will improve your credit score steadily.
- Avoid cancelling non-existing credit cards which will lower your credit score.
- It is must that you should not exceed your credit limit.
- If you have any loans that needs to get sanctioned, then do it soon before lender start his inquiries and therefore it results in lowering your credit score.
- If your credit score is good and no bad remark has been recorded so far, then it’s good to choose a secured credit card.
- Choose a different card for your monthly expenses and make those payments on time. Don’t use same credit card for making payments on real estate investments and regular expenses.
When you are applying for credit card, make sure it’s from a reliable bank, many scammers pretend themselves as bankers and cause lot of issues especially if you are a first –time card holder.
Improving credit score will take time and there is no quick way to fix a credit score. Efficient management of funds will help in building your credit score. Make a payment plan that suits your budget and it should be created in such a way that all your payments are made on time.
Investors should be aware that paying off later is not going to help and will be visible permanently in the credit report for 7 years. Neither closes your credit cards that are not in use nor opt for new credit cards thinking that you are increasing your credit limit which will lower your credit score.
Likewise don’t open new accounts in the bank if you are managing funds and having a good credit, opening new accounts often will lower your credit. To learn more about credit report, bureaus visit DC Fawcett virtual real estate investing club.
DC Fawcett Reviews – What is Low credit mortgage?
One of the real estate financing method for investors with low credit is opting for sub-prime mortgage and high rate of interest is levied by the lenders. DC Fawcett Reviews This is done so as to compensate the loss due to payment default if any in the future. The loan is characterized by variable rate of interest than fixed rate.
DC Fawcett put forth his ideas about availing mortgages with low credit.
- Sub-prime loans levy high rate of interest than prime loans. The risk-based pricing factor has to be kept in mind while applying for sub-prime loans. Investors are already affected by low credit score; further debt will lower the score, so sub-prime loans can be applied only when score is improved.
- In some cases borrowers may take a higher interest second mortgage to help qualify for a lower cost first mortgage. They are characterized by many fees like balloon payment penalty, pre-payment penalty etc. Apart from that pre-payment penalty is levied that is against the home buyer if the loan is paid before the time period which is usually 5 years.
- A balloon payment is a huge sum of money is paid by the investor to sell the home or for refinancing. The first-time homebuyers may or may not come across these types of payments, which is actually a scam. The scammers make use of this opportunity and mint money.
- In order to prevent such happenings, it is better to take the help of financial advisors. The legal paperwork must also be reviewed. The bad credit may happen due to late payment, Non-payment of debts, already existing debt and issues related to credit history.
- When you are writing checks, you must be careful; bad checks lower the score. The lenders expect a score of 650 and above to approve a loan and also the rate of interest will be low. As investors have low credit, documentation is must which is expected by the creditor.
- For investors having scored less than 620, the loan process is longer where he/she has to cross many obstacles and questionnaires. They have to reason out why the score is low. If the score is less than 620, the investor is under risk and can apply for loan when it is 650 and above
- Another type of loan is 2/28 ARM offering loans for 2 years with a fixed rate and then the rate is adjusted. Failing to pay the mortgage on time will result in loss of home ownership or in other words, foreclosure.
Joint borrowers (couples) who apply for a mortgage together pay a higher interest rate than individual borrowers. There are more chances that one may have a good credit score and other with a low credit score. This is pretty advantageous for an individual with a low credit as they can use their spouse to be a co-signer.
To know more about credit score and how to prevent from scammers who pretend themselves as mortgage lender are mentioned in the next article and you can check out in DC Fawcett virtual real estate investing club.
DC Fawcett, the founder of the Virtual Real Estate Investing Club, is an experienced person in the real estate field. He has been into the process of rehabbing houses, wholesales etc.