Three tips to buy a home when you have a bad credit score – including raising your ‘grade’

Having a good credit rating can be very useful when buying a home.

However, hope is not lost for those whose credit ratings are not that great or who are still building their credit ratings.

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Judy Dutton is Editor-in-Chief at


Judy Dutton is Editor-in-Chief at Realtor.comPhoto credit:

Usually, all people who want to buy a home go through a similar process, including taking out a loan.

That means you’ll have to meet with banks, credit unions, or online lenders, who will inevitably check your credit score.

A credit score is an indicator of your financial behavior and is typically used to ensure that you are likely to repay a loan on time.

This is calculated using credit reports, taking into account factors such as bill payment history, current unpaid debts, the number and type of loans you have, any debts filed for collection, foreclosures, bankruptcies, and more.

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In another episode of our Let’s Get Real series, The US Sun spoke to Editor-in-Chief Judy Dutton to shed some light on creditworthiness.

A little more credit

Judy told The US Sun that a credit score “essentially serves as a grade that represents your track record of paying off debt.”

A credit score can also be referred to as a FICO score – named after its inventor, Fair Isaac Corporation.

“The number is calculated using your credit report, which is a complete record of every credit card, student loan, car loan, or other loan you’ve ever been responsible for,” Judy said.

Good credit is important when buying a home because most lenders will only lend to people who have a proven history of paying off previous debts.

Typically, credit scores are between 300 and 850, with an “excellent” score being between 750 and 850.

A good credit score is between 700 and 749, a fair score is between 650 and 699, and a score below 650 is considered bad.

While the minimum credit score required for a mortgage varies, the lowest number you want is usually 620.

This is because traditional loans have a minimum credit rating and therefore it will prove difficult to achieve a lower credit rating than this.

1. Find the right loan

While a low credit score isn’t ideal, you can still qualify for loans.

Government-backed loans are a good place to start, as they tend to have slightly more lenient credit requirements.

For example, Federal Housing Administration loans are great for first-time buyers and those with lower ratings because the down payment can be as high as 3.5 percent.

Additionally, buyers may qualify for a US Department of Agriculture loan at an interest rate of just 3.25 percent.

However, keep in mind that borrowers must meet certain requirements to be eligible for loans, and may require a minimum credit score, maximum debt-to-income ratio, and proof of employment.

2. Pay attention to interest rates

Researching the right loan for you is a good tip for everyone, especially those with a lower credit score.

Note, however, that people with low credit scores may only be eligible for a “subprime” loan.

Judy said that borrowing money here pays a higher interest rate than borrowers with good credit.

“You may also have to pay for mortgage insurance, an extra fee lenders charge to mitigate the risk of defaulting on your loan.”


These subprime mortgages are likely to cost a homebuyer thousands of dollars more over the life of the loan, which is why it’s imperative to check your credit history and check your credit report before you start buying a home.

You can check your credit score and report it for free on sites like

Raise your grade

While it may take time, improving your credit score is possible, and it all starts with knowing how to tabulate it.

Judy broke down the score as follows: 35 percent of scores depend on payments being made on time.

Another 30 percent comes from your debt-to-credit ratio, which is the amount of your accumulated debt compared to your full credit limit.

The length of the credit history accounts for another 15 percent, which is why not having a credit card at all actually has a negative impact on the score.

“But by far the most effective tactic for improving your credit score is to always pay your monthly bills on time and pay off as much debt as possible so that you have little or no balance month after month,” Judy added.

Remember that change doesn’t happen overnight.

Once you implement the credit-boosting tactics, it can take months to improve your score.

That’s why it’s important to start building your credit score from an early age and making sure all payments are made on time.

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Aila Slisco

Aila Slisco is a Dailynationtoday U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. Aila Slisco joined Dailynationtoday in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing:

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