Most people do not appreciate the importance of credit score until the day they need a mortgage. Banks and institutional lenders follow a strict code when making loan approval decisions. The result is a situation where people with bad credit are prevented from accessing bank and credit union loans. These people can only turn to private lenders offering bad credit mortgages in Tecumseh.
Credit Scores Needed by Different Lenders
- Banks need to see 600 points or more
- Credit unions are a little lenient, needing at least 550 points
- Private lenders don’t judge on credit score
How to Check Your Credit Score
A credit score is calculated by credit reference bureaus based on the information given to them by different lenders. This is the job of TransUnion and Equifax – the largest credit bureaus in Canada. Personal credit scores must be requested from the official websites of these organization every once in a while to make sure yours is above the minimum required by banks. Institutional lenders can get credit reports on everyone but if you need a free personal copy, contact our staff who also do credit reporting.
Bad Credit Mortgage Lenders in Tecumseh
Anyone whose score is below 550 has to depend on private bad credit mortgage lenders in Tecumseh. These are individuals and companies ready to issue loans despite their clients’ poor state of credit. Individuals who frequently miss bill payments or those facing bankruptcy can get assistance from the private lenders in our network. They offer reasonable amounts so that clients can make meaningful financial progress. Private lenders will ask why you need the money but only for record keeping. As opposed to banks, they are very lenient and will accept any reason including vacation and bills.
Approval Criteria for a Bad Credit Lender Mortgage
Private lenders might not have much care about your credit score but that doesn’t guarantee automatic approval. Theirs is a high risk business which could lead to huge losses if a lender doesn’t rely on some guidance to approve loan requests. Loan to value ratio is the most commonly used measure of risk on a property which is obtained by dividing all debts by the current price. This value should not be above 75% if you are to get a bad credit mortgage loan. High Loan to Value ratio means that borrowers only command small equity which might not suffice in the event that the property is auctioned off. This decision bears in mind the fact that after selling property prior mortgages must be cleared before the private bad credit mortgage lender can be compensated. Relative credit scores could contribute to better mortgage terms but they are not a mandatory requirement.
Fees and Rates
Good credit will help you enjoy 2.7%-4% interest rates but if you score below 550 private lenders can charge anything from 7%-15% interest on the mortgage. This is all in an attempt to reduce the risk involved with servicing bad credit mortgages in Tecumseh. You must also pay legal, appraisal and administrative fees as the lenders in the city try to cut costs as much as possible. We can send multiple quotes from our private lenders in the city so that customers can compare and choose the best possible terms. The money from a bad credit mortgage can be used as the borrower likes because private lenders are more lenient than banks. They accept all kinds of reasons including home renovations, tuition, tax payments or even vacations.
How to Strengthen a Weak Score
Credit cards must be used wisely because of high-interest rates that may cause a decline if you are not careful. Making small, affordable purchases is the wise thing to do to avoid getting caught up. Secured credit cards ensure that you never exceed a set limit on the deposit amount made to cover any debt if the customer misses a deadline. Bad credit mortgages by private lenders could help in building a credit score but you have to repay all fees according to the agreement. Credit scores are updated every 6 months so make sure to ask for yours so you can stay in the loop. Generally borrowing and repaying every so often means that you are creditworthy and if things go well, banks will soon approve your requests.