For those who have bad credit, the world can feel like a relatively closed-off place. Low credit scores have been forever demonised by most major lenders – the big red stamp marking the application ‘denied.’ As such, many feel discouraged to apply for home loans. But would you be happy to hear that a lot of these preconceived notions are often just myth?
Here are four myths about bad credit home loans and general credit issues debunked:
1. Myth: If you have a bad credit score, you can’t qualify for a home loan.
Truth: You can’t qualify for a traditional home loan, but fortunately that’s not your only option! Bad credit home loans are available to borrowers who aren’t in good credit standing but are in search of a home/or are buying a home. This type of loan can be granted up to 95 per cent of a property’s value depending on the case. While interest rates might be higher, it is an option for many, especially those who are actively working on bettering their scores for a more stable future.
2. Myth: Your bad credit score will never go away.
Truth: It’s never too late to repair your credit score. It will depend on how much debt you have accrued over time, but you should be able to bring your score up once you start consistently paying on time. It takes about seven years for a bad score to really go away, but as long as you’re making those payments it will start to do less damage on your score over time. Fortunately, you have the aforementioned bad credit home loan to help you buy property in the mean time.
3. Myth: You only have one credit score.
Truth: Every individual actually has multiple scores to keep track of, as there are different models per each credit bureau. This might sound overwhelming and hard to keep track of, but so long as you are paying your bills on time, you won’t be doing any damage to them. Note however, that you cannot combine your score with another’s like a partner – you’re on your own!
4. Myth: Only those with defaults can get bad credit home loans.
Truth: Bad credit home loans were created to help those who have serious blemishes (like defaults or bankruptcy) on their report, but it’s not exclusive to them. Other situations that can qualify others for this type of loan include not having enough deposit or credit file activity.
RedRock Mortgages are here to support you through bad credit score times. Contact us today and we’ll help you sort through your individual options.