A house is a huge investment. Many people have been able to make a home purchase by acquiring a mortgage loan from their local bank or lender. However, because it involves a large sum, many lenders have strict standards or credit requirements. If you have bad credit, it might be more difficult for you to get approved.

Should you buy a house if you have bad credit? If possible, it would better to wait until your credit history improves before acquiring a home loan. With a higher credit rating, you should be able to qualify for the best mortgage loan deals. Aside from that, you will be in a much better position to negotiate with a prospective lender. What if you have decided to apply for a home loan at this time? What can you do to increase your chance of getting an approval?

Improve your credit score. The first step is to order a copy of your personal credit report from the three major credit bureaus (Experian, Equifax, TransUnion). Examine your report and make sure that there are no errors or unauthorized charges which could be pulling down your credit score. You should be aware that negative remarks can only remain in your report for seven years so if you have such remarks that are older than 7 years, then you should have them removed from your file.

Are there unauthorized charges in your accounts? See to it that you are not paying for debts that you did not owe. If there are unauthorized transactions, dispute them right away by contacting the creditor involved and by sending a letter to the bureau that issued your report. Promptly submit your current payments. Keep your credit usage minimal especially if you own multiple credit cards. See to it that your credit card charges do not exceed 20% of your credit limit.

Check out FHA loans. If you have bad credit, then you should check out the FHA Government Loan Program. FHA loans are ideal for borrowers who have less than perfect credit history. In fact, even if you have history of bankruptcy, you can still get approved as long as you have been discharged for 2 years. Lenders that offer FHA loans are more lenient when it comes to their credit requirements. Furthermore, these loan tend to have lower interest rates compared to commercial bad credit loans.

Do not submit multiple applications. Avoid submitting multiple applications to different mortgage lenders just to see which lender will grant approval. Such a strategy will only inflict more damage to your credit score since your score will drop with each inquiry made to your file. In addition, if a prospective lender sees too many inquiries in your report, it may get a negative impression as to why you need to apply for a number of mortgages all at the same time.

Prepare for down payment. If you have bad credit, you may have to make for it by submitting a higher down payment. It’s a good idea to save up for this upfront cost before applying for a loan. Also, try to request for a lower rate if you can pay a higher down payment.