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 the 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 the websites of Equifax or TransUnion 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 for people whose score is below 550 as institutional lenders consider them a high-risk investment. They also give loans to people who 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
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 with current 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%-3% interest, private lender interest reaches 7%-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 loans to people with bad credit but enough equity in their homes. In so doing, this special class of investors gives another chance for individuals to build-up their scores.
Improve Your Credit Score
It is important to keep checking your credit score every 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. You may also request a secured credit card from your bank to make sure that payments are made immediately overdue payments are produced. 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. It takes time for credit reference bureaus to collect all data and calculate credit scores for them but six months should be enough for you to see an increase. If you stay committed, a poor credit score will become so high that banks will have to approve your mortgage request at better rates than private bad credit lenders.