Banks mainly rely on an individual’s credit score before extending them loan products. While this assures banking institutions of profits, many people fail to meet their demands for a high credit score. These are regarded as having bad credit, which is not ideal for organizations that want to profit from most investments. With a negative credit score, you can only look for bad credit mortgages in Brockville, which do not require specific credit scores.
Scores Needed by Different Lenders
- Credit unions need to see 550 points or more
- Banks take it a notch higher to demand 600 points
- Private lenders do not consider one’s credit score
How to Get Your Credit Score
Credit scores are calculated using records of each citizen’s borrowing and repayment habits. In Canada, credit reference bureaus receive reports from different lenders about clients so they can give the most accurate ratings. If you are interested in how you scored, simply visit Equifax or TransUnion websites and pay for an updated report. We could get you a copy, too, as we also do credit reporting. Banks can pull a client’s credit report directly as they need this information to decide who gets the loan and who will be denied.
Bad Credit Lenders for Brockville Mortgages
Only private lenders can give bad credit mortgages to people whose score is below 550, as institutional lenders consider them a high-risk investment. They also give mortgage loans to people who have faced bankruptcy or consumer proposals in the last two years. These bad credit mortgage lenders in Brockville might ask your reasons for needing the mortgage, but that is only for record-keeping reasons. You can use the money to pay school fees, medical bills or credit card debt, among other personal matters.
Approval Criteria for Bad Credit Mortgages in Brockville
Private lenders may not be interested in credit as a measure of credit worth, but that does not mean they will approve any loan request. They, too, have a criterion for approving and denying requests, which is guided by equity. To assess this, lenders have to compare the value of all mortgages against your property with its current selling price. By dividing debt value by the appraised selling price, potential lenders get the loan-to-value ratio. To prove that there is sufficient equity left, the result must be 75% or less, without which even a bad credit mortgage lender will turn you down.
Fees and Rates
People with bad credit are risky to invest in, which is the main reason for high interest rates by private lenders. Unlike banks, which charge 2.7% to 3% interest, private lender interest reaches 7% to 15%, but that is not all. In a bid to protect themselves from losses, private lenders also, require customers to pay legal fees, administrative fees and paperwork fees needed to start the process of setting up your mortgage. If you have the time, compare prices from different private lenders so you can land the best deal. We work in close contact with several private lenders in Brockville who are always willing to give mortgage loans to people with bad credit but enough equity in their homes. In so doing, this special class of investors gives individuals another chance to build up their scores.
Improve Your Credit Score
It is important to keep checking your credit score occasionally to make sure it is updated. Knowing your score also helps you know what measures you can take to mend it. If it is too low, try charging small purchases to a credit card so that monthly rates never become a burden. Request a secured credit card from your bank to ensure payments are made promptly after overdue balances arise.
Secured credit card best practices involve paying off the debt and staying within the 60% limit. These efforts will certainly contribute to a better credit rating, but this will not happen overnight. Credit bureaus need time to update data, but six months is usually enough to see score improvement. Stay committed, and your credit score can improve enough for bank approval with better rates than private lenders.