If you have a bad credit rating then it becomes more difficult for you to get approval for a home loan in normal rate of interest. That means, borrowing the desired amount gets more expensive along with less repayment options.However, these days, there is some provision that makes it possible for people with low credit score to get approval on their loan application. Here are the five strategies that may increase your chances, despite of having a bad credit rating –
Use security or collateral
You can use assets like your home, property, boat or car as collateral to secure your loan. Most of the lenders are ready to offer loan based on the equity or valuation of the collateral.
Apply for a loan from credit union
A credit union is also a favourable option for many to seek home loan without much hassles. These organisations derive money from investors or individuals and do not have contact with banks. Therefore, the documentation process is not complicated. However, they follow specific criteria to approve bad credit loans, as they do not aim to lose their money.
Find a co-signer or guarantor
If you have a guarantor or co-signer who has a good credit rating and constant source of income, it will become easy for you to get a quick approval on a home loan. However, in case you are not able to repay the loan amount as per the terms, than your co-signer will pay the loan amount on your behalf. All it takes is to convince your guarantor that you do not have any intentions to put him or her under this sort of compromising situation.
Declare your savings present in your saving account
Declaring your savings account serve as an assurance that you have sufficient fund in your account, if in case there will be any shortage of fixed or regular income. There is no need to have a huge amount, as even in small savings, you can prove to a moneylender that you are capable of repaying the loan.
Try to improve your credit score with the help of a financial advisor
Is there any irrelevant details mentioned in your credit report that is affecting your credit rating? It might be possible that a poor credit rating may be due to delays in paying bills that had already been settled. Thus, it is recommended to consult this matter with a financial advisor who help you to improve credit score with their proven tactics.