No one finds bad credit attractive. It is even much worse when you need to borrow from credit facilities because it shows all the skeletons in your borrowing history. Times when you’ve defaulted in your payments for one reason or another such as failing to pay on time can gravely affect a lender’s decision to give you mortgage. A pending loan that got out of hand and bad credit from previous borrowing will magnify the problem even more. If you’re aware of all this, then there’s hope in the horizon!
What to do then? How can you boost your credit score? Proactively trying to keep your financial health in good condition can prevent you from achieving worse credit in the future, but how?
Applying for a refinancing to get a new loan with better terms and payment plan can save you a lot of money. New mortgage terms can help you pay back your debt and therefore boost your credit score. Sounds like a plan? You bet!
So how can you get a new loan when you have a bad credit history? Here are tips to help you get refinancing at much better interest rates:
Tidy Up Your Paperwork
Wrong information can break your credit score. Check your credit documents and see if the information contained therein is valid. Rectifying errors can make you more eligible for refinancing at lower interest rates.
Make it Personal
You need to make your lender understand why you have a bad credit situation and the best way to do that is to meet your lender in person. By helping your lender understand your situation, you’re letting them see what you’re doing to pay back and that you care.
Know Your Ability to Pay
Things change, and what you can afford to pay a few months ago may be totally out of what you can afford now. The good news is that you can change your loan terms to help make payments easier for you. How can you do that? By refinancing! But remember that you have to be able to convince your lenders that you have the ability to pay your new terms. One thing you can do to convince them is to show proof of your ability to pay by depositing some money in the bank or by showing proof of your expected revenue. This often leads to favourable payment terms with lower interest rates so be sure that you can hold your end of the bargain!
Have Strong Guarantors
Pick your guarantors right. The people guaranteeing your loan should have a better credit rating and score than you because this shows lenders that your guarantors believe that you have the ability to pay your mortgage. After all, being a guarantor means they’re willing to pay your loan should you default on payment. Establishing that you have a low risk of defaulting will make your lender more willing to refinance your mortgage at more favourable rates.
Shop for a Better Lender with a Strict Loan Policy
Your main goal should be to get a better credit rating/credit score and to get out of debt, so don’t be tempted to go for loans with tempting terms such as those that allow you to withdraw extra payments. Facilities that tempt you to spend more are no better than parents who spoil their children and will do you more harm than good in the long run.
A better mortgage package means that you don’t have to borrow again, because hopefully, you’ll be able to have a better hold of your financial health. A great mortgage broker can guide you to the best lenders who can offer you the best rates and terms.
Looking for a mortgage consultant in Ontario to help you apply the tips above? Allow us help you with our 60 years of industry expertise fixing bad credit and helping people like you with their mortgage. Contact Homebase Mortgages today!