Poor Credit Mortgages and Your FICO Score

FICO is the agency that deals with credit reporting. Financial institutions take the assistance of FICO when you apply for a home loan mortgage. Your FICO score is a credit score used by financial institutions to evaluate how much of a risk you are to them. When your FICO score is lower, you will face plenty of problems in getting approval for a mortgage but when your FICO score is high you will get immediate approval and interest rates are going to be low.

FICO Score Evaluation

Your borrowing record is commonly used in evaluating your FICO score. With just one or two mistakes in your credit record, your FICO score can become quite low. Some of the things that can have an impact on your FICO score are:

• The time period of your credit account
• Credit amount used vs. credit amount available
• Late payments
• Negative credit details such as bad debt write-offs and bankruptcies

Score Specifics

When your FICO score is less than 500, your mortgage home loan application is not going to be approved. When your FICO score is in the range of 500 - 600, your mortgage home loan application can be approved but you need to make a down payment. When your FICO score is in the range of 600 – 640, your mortgage home loan application will be approved without any sort of down payment.

Increasing Your FICO Score

You cannot improve your FICO score all of a sudden, it will require serious effort on your part for a period of at least six months. To increase your FICO score, make sure you pay all your dues on time and your credit card balance is less than 30% of your credit limit. Another important thing that you need to do is to get rid of any old negatives that are on your credit record.

Getting a Mortgage Loan with Poor Credit

If your FICO score is not up to the mark and you do not have resources to improve your FICO score, the only option left for you is to go for a bad credit mortgage loan. A bad credit mortgage loan is ideally suited for individuals with bad credit. The main advantage of this loan is that the application procedure is quite straightforward and you will get approval without any hassle.