Is your credit score 600 or lower? That’s okay! A credit score of 600 is still considered a good score and is not an obstacle to obtaining a mortgage. While it may be harder for you to get approved for a loan, there are still ways to get a mortgage with a 600 credit score. Let’s break down what you need to know about mortgages with less-than-perfect credit scores.Verify your mortgage eligibility (Dec 2nd, 2023)
What Makes Up My Credit Score?
Your credit score is made up of five components: payment history, amount owed, length of credit history, new credit accounts and types of credit used. Payment history constitutes 35% of your total score. This component looks at whether or not you pay your bills on time and in full each month. Amount owed comprises 30% of the total score and examines how much debt you currently have compared to the amount of available credit you can use. Length of credit history accounts for 15% and checks how long your accounts have been open as well as when the last activity was reported on them. New credit accounts make up 10%, while types of credits used account for the remaining 10%.
Ways to Get Approved For a Mortgage With Poor CreditVerify your mortgage eligibility (Dec 2nd, 2023)
The most important factor in getting approved for a mortgage is income; usually lenders will require that home buyers can show proof that they make enough money to pay back the loan within its designated timeframe. Even if your credit score is poor, if you have steady employment with adequate income that can help boost your chances at getting approved for a mortgage loan. Another helpful tip is to make sure that all debts are paid before applying; this shows potential lenders that you are responsible with money and will help increase your chances at being approved for the loan. Lastly, try reducing other debts like car loans or student loans; having excess debt can decrease your chances of getting approved for a loan since lenders want to ensure that borrowers have enough financial breathing room after taking out the mortgage loan.
A low credit score doesn’t mean it’s impossible to get approved for a mortgage—it just means it might take more effort than someone with higher scores such as 700 or 800+. Making sure all debts are paid off before applying, having adequate income levels, and reducing other existing debts can help increase your chances at being approved for a mortgage even with poor credit scores like 600 or lower. Don’t let bad luck keep you from fulfilling one of life’s greatest dreams—owning your own home! Doing research now could save you hassle later on when it comes time to apply for that mortgage!Show me today's rates (Dec 2nd, 2023)