When you lodge an application for a home loan, the first thing your bank will do is to check your credit score. A credit score or credit history is basically a result derived from the analysis of a person’s credit files.

When you lodged your application for a home loan, the bank will evaluate you in terms of your ability to repay the loan on time based on servicing and previous history. For this, they do a complete analysis of your income, on-going mortgages, assets and take into account many other factors to assess you. This will provide the banks and other non bank lenders a clear picture of your risk status. If you try to borrow money with bad credit from a Bank, it is very likely that your application will be rejected.

Reasons for Bad Credit History

A person may end up with a bad credit score due to a number of reasons. Laziness in paying the bills, poor financial situation and overspending are some of the major causes of bad credit. Different lenders have distinct methods of assessing a person’s creditworthiness. A bank can deny the application of an individual requesting to borrow money with a bad score as per bank’s policies. To improve your credit score, you can talk to a debt consolidation firm for easy repayment options.

Home Loans with Bad Credit

Having bad credit does not disqualify you obtaining a home loan. You can still borrow money with bad score with the help of a Non Conforming Lender.

A Non Conforming Lender will analyse your financial records and grant you loan on certain terms and conditions.

The applicant applying for the loan would generally need to pay a higher interest rate and costs than an individual who has a good credit rating.

If you own a home you can borrow money with poor credit to consolidate your debts, since your asset will be used as collateral. This is called a secured loan. If you do not own an asset, then you still may qualify for an unsecured loan which is subjected to specific conditions.