Earlier, having bad credit was the greatest detriment to getting a mortgage approved. However, today there are a vast number of companies who specialize in providing mortgages to people with bad credit. Even a large number of mainstream companies (read: highly reputable companies) are joining the fray. Mortgages to people with a bad credit history are today considered to be big business.

Bad credit mortgage companies, also called sub-prime mortgage companies, rely on FICO scores to determine the creditworthiness of a person. These scores are available with agencies such as Equifax, Experian and Trans Union Corporation. A FICO credit score of less than 620 is generally considered bad credit. Though mortgage companies today do not shirk from giving loans to bad credit people, they do not typically provide any mortgages to people below FICO scores of 500.

The bad news is that many mortgage companies do not hesitate in taking advantage of the precarious situation their bad credit history clients are in. This is shown by the way they charge higher rates of interest than people with good credit. This means more business in the bad credit mortgage market. In addition, people with bad credit need to make a down payment (typically at least 20%) to prove their earnestness to the purpose of taking the mortgage. This is good to the borrowers, as it makes repayment easier. Bad credit borrowers are also obliged to pay mortgage insurance- only that the rates of interest may be marginally higher.

Yet today, with new laws being passed, the distinction between people with good and bad credit is blurring. Mortgage companies are charging lower rates of interest than before. With the advent of the new economic term ‘non-status’, which includes those self-employed people who cannot prove their accountability, several people have been subtracted from the bad credit category. The interest rates for non-status people are almost the same as that of people with good credit.

Companies specializing in bad credit mortgages are extensively advertising on channels such as the internet. They invite people to get pre-qualified and fill online application forms. Such companies are doing a great business in the market of bad credit mortgages.

However, people with bad credit must be wary of companies that are looking to fleece them. Some unscrupulous companies may create a psychological fear in the minds of their clients that they would not get loans elsewhere, so they can ensnare them for higher rates of interest. It is always advisable to shop around to hunt for the best bad credit mortgage company in the market.

Equifax, TransUnion and Experian are nationwide consumer reporting companies required by the Fair Credit Reporting Act or FCRA to provide consumers a copy of their free credit report with score each year. This Act is implemented by the Federal Trade Commission, a consumer protection agency that also promotes privacy and accuracy of information from these three companies.

In general, a credit score is the measure of credit risk computed from a collection of credit reports using a standardized formula. It includes information of your address, how you pay your bills, and whether you have filed for bankruptcy or have been sued or arrested. The scale for credit score ranges from 349 to 849; indicative, for example, that a 640 rating will most likely give you difficulty getting a good loan. This kind of information are sold by consumer reporting companies to insurers, creditors, employers and businesses for evaluation of your credit, employment, insurance and home rental.

So why would you want to have a copy of your credit report? Because it contains information whether you can get a loan and how much you will have to pay; to make sure that it is up-to-date, accurate, and complete before doing a major purchase for car, insurance, house or even to apply for a job. Getting your report on a regular basis makes you manage your accounts well and lets you venture on possible ways to improve or raise your score. This is also one of the many ways to combat identity theft which has been widespread today especially to internet-related transactions.

To get a free credit report with score, you need to provide your name, date of birth, address, and Social Security number. You may also need to indicate previous addresses if you have moved in the last two years. To ensure your security, every nationwide consumer reporting company asks for information that is exclusive to you.

Along with the credit report, it is also advisable to request for credit monitoring to be updated of any strange transaction or activity on your accounts such as change of account information and opening and closing of investments and bank accounts.

Usually a free credit report with score can be accessed immediately although it may even take longer if the nationwide consumer reporting company requires more information to verify your identity.

Under a state law, consumers living in Vermont, Georgia, Colorado, Maine, Massachusetts, New Jersey and Maryland have access to free credit report with score.

If you know you have a very low credit score, and perhaps a nasty looking lend report, you could yearn to do some research on repairing your credit, before applying for a Home Loan. While repairing your spoiled lend is no easy task, it’s something that you can do yourself, apart from paying a credit repair business or getting involved in one of the many credit repair scams out there.

Be warned, there is no easy fix. Improving your lend study legitimately does take time, a purposeful effort, and strict adherence to a personal debt repayment plan. However, once your credit is improved or repaired, you may be able to qualify for a Home Mortgage.

According to the Franchise Tax Board, first, you will yearn to acquire an up-to-date copy of your lend report.
If a business takes “adverse action” against you, like denying your application for credit, insurance, or employment, you’re entitled to a free lend report. Your request must be made within 60 days of receiving observe of the action.
If you’re unemployed and plan to look for a job within 60 days, you’re also entitled to one free credit report, per year.

If you’re on welfare or if your study is inaccurate because of fraud, including identity theft, you are also entitled to one free credit report per year.

How to Request a Copy of your Credit Report

Equifax, Experian, and TransUnion are the three nationwide consumer reporting companies. If you ask for your credit report, they are required to provide you with a free duplicate once every 12 months.

You can also call 1-877-322-8228
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

How to Repair your Own Credit

To correct or repair facts on your credit study that is incorrect, you will want to write the consumer reporting companies listed above. The Franchise Tax Board advises the following: “Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the information and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a duplicate of your report, and circle the items in question. Send your letter by certified mail, with a return receipt request so you can licence that the consumer reporting company received it. Keep copies of your debate letter and enclosures.”

What If the Negative Information on My Credit Report is Accurate

Unfortunately, in this case, the only way this facts can be removed is via the passage of time. Use the following time table to calculate how long this facts will remain on your credit report:

- Most accurate negative information: Seven years from the date the drill took place.
- Bankruptcy information: 10 years from the date the bankruptcy took place.
- Unpaid judgments: Seven years or until the statute of limitations runs out, whichever is longer.
- Criminal convictions: no time limit, may never be removed
- Information reported in response to your application for a job that pays more than $75,000 a year also has no time limit.
- Information reported because you’ve applied for more than $150,000 value of credit or life insurance: no time limit.

Where to Turn If You Need Help

Just because you have a failing lend score or a dreadful credit study doesn’t defaming you can’t acquire credit. Every creditor has their own set of standards, and views credit scores and reports uniquely. If your recent bill payment history has been improving, this can earn you some credit worthiness. Some creditors may look only at recent years to appraise you for credit.

If you are looking for help adhering to a allot and making your payments on time, in a consistent fashion, you may yearn to try to work out a repayment plan with your creditors, or you might take into account contacting a credit counseling organization.

All this hard work is ultimately a huge step towards financial freedom, and being able to get a loan to buy a home or Refinance a home you already own.

For more information, visit the FTC’s website.