Your credit score combines a number of different criteria into one three-digit number. This digit is comprised of different factors, including the length of your credit history, your credit utilization, types of credit, and new credit applications.
It’s a number that tells creditors how likely you are to repay a debt.
Your credit score depends on the scoring model that gets used. There is some wiggle room but generally, a score of 300 to 579 is considered poor, and one of 620 to 739 is thought of as good. A credit score that a lender would consider excellent is between 800-850.
While there is no magic number that you can count on as an absolute, here are some more guidelines so you can get a good general idea of what’s required.
Scored Required By Different Lenders
- Generally, Trust Companies require a credit score of 700 to get a loan.
- Banks often accept scores between 620 to 700 to accept an application.
- Private Lenders are the most flexible option. Unlike more traditional lenders, they focus on a different set of factors that include equity and what’s called a Loan To Value Ratio (LTV).
Even though a bad credit mortgage in Niagara Falls is possible through private lenders without undue focus on your credit score, it’s an important number. It’s an indicator of your financial responsibility and can even affect items like rental applications as well as loan terms and interest rates.
The first step in taking responsibility for your credit score and improving it where need be is to check the information.
How to Check Your Credit Score
There are two agencies where you can check information and your credit score—TransUnion and Equifax.
The first step to improve this number is to check for any kind of errors on your credit report. You should be looking for ones like the following:
- Any errors in your payment history can harm your ability to get credit. Look for incorrect missed or late payments.
- Incorrect personal information can hurt your score too. Check even basic items like your address and name.
- There are a few other items that need to be looked at but one of the most common categories you’ll need to look at is credit inquiries. More than a few hard inquiries over a short period of time can have a negative effect on your credit score. These are usually lenders reviewing your report after you’ve submitted an application.
If you find any incorrect information, you’ll need to contact the credit agencies to have it fixed.
Private Lenders For Bad Credit Mortgages
Although they are quick to stress there’s no absolute number, Equifax does report someone with bad credit generally has a score below 560. If you find yourself in a category, you might have a hard time qualifying for a traditional loan or mortgage.
However, private lenders are an excellent alternative because they supply bad credit mortgages. The requirements for one of these products are more lenient than with traditional banks and credit unions.
Requirements for Private Lender Mortgages
Bad credit mortgages through private lenders are easier to qualify for than more conventional products. Rather than place a big emphasis on the number like a credit score, private lenders focus on different sources including the Loan-To-Value (LTV) ratio. This number is calculated by dividing the value of any existing mortgages by the market value of the property.
Canadian private lenders also look at existing debts and the amount of equity that’s been amassed in the property. Thinking about applying for a bad credit mortgage through one of these alternative lenders?
Remember, any application takes into account the risk is higher for the private lender. That means the costs for borrowing are a little different.
Interest Rates and Fees for Bad Credit Mortgages
A bad credit mortgage through a private lender involves several different fees and costs. The majority of these are paid from the proceeds of the mortgage. Only the lender’s administrative fees and the appraisal money are required to be paid out of pocket.
Interest payments on bad credit mortgages are the way these alternative lenders make money on each of these loans. These lenders can also incur other costs like payments to people for drafting paperwork and government agencies to gather property data.
Along with some other applicable money, a private lender can charge some exit fees if a mortgage is terminated. These can equal several months of interest payments.
You can also be charged legal and appraisal fees. Interest rates charged on these loans can vary. Get in touch with us today if you’re interested in hearing some numbers.
A private lender is always ready to help you with bad credit mortgages. Helping yourself to a better financial future is also about improving your credit numbers.
How to Repair Your Credit Score
Improving your credit score is about persistence and changing your credit habits. TransUnion suggests that you pay bills on time even if you can only make the minimum payment. Here are a few other suggestions that will make a difference.:
- Keep an eye on your credit card balances. It’s never a good idea to use too much of what’s available. Making prudence your keyword here will help improve your standing with lenders and your credit score.
- Be wary of opening new credit card accounts. Applying for new cards too often can make you look irresponsible to lenders.
- Make sure financial institutions know when you’ve moved. Don’t let your bills go unpaid because your mail didn’t show up at your new address.
Checking your credit accounts on the Internet can help you to stay current. Don’t wait for them to come in the mail and find out there’s a problem.
Mortgage Broker Store is a private mortgage lender that can help you with bad credit mortgages in Niagara Falls. We serve several locations in the GTA. Call 416-499-2122 or email ron@mortgagebrokerstore.com for some free advice. Our team has 34 years of experience.