Compounded by today’s credit squeeze, the risk of recession and large amounts of foreclosures, obtaining a mortgage loan even if you have a regular credit score can already be a very difficult process. If you have a bad credit history then it is more than likely that most of you application for mortgage loans will be turned down. Have a look at our specialized lenders listed below so you can get a fighting chance at getting a mortgage loan at reasonable rates if you have a bad credit history.

In order to fully understand where you stand when it comes to your credit history it is vitally important that you know a bit about the standards on which you will be rated on. The credit score that everyone is subjected to is called a FICO credit scoring system. FICO stands for Fair Isaac & Company who are a leading credit reporting agency that lenders will refer too when it comes time to access your credit worthiness.

The exact formula used to FICO to determine your credit score isn’t publicly available based on the decision by the U.S. Congress but there are some things generally known that could help you in deciphering how your credit score is calculated so you can make improvement to it.
The first thing to understand is that the higher your FICO score the better your credit score and the more credit worthy you are. Those with high scores have a much better chance at getting a mortgage loan and also have a much larger room to negotiate rates with their lenders. A higher FICO score means you represent a much lower risk and thus a better client for the lenders.

If you have a FICO score that is lower than 500 then there is little chance that you will be able to get a mortgage loans with normal lenders. Instead you will be required to obtain loans from specialized bad credit lenders which if not chosen properly can be an extremely expensive option.

If you have a score ranging from 500-600 then you can still obtain a loan from normal lenders but have little to no room to negotiate the rates. You will also more than likely have to put down a rather substantial down payment in order for the loan to be approved.

A score from 600 up means that you have a good credit history and that you are within the bracket of acceptable credit risk to the lenders. More often than not this means that you are able to get away with up to 100% financing on your home and with quite a bit of room for rate negotiations since the door is open to many lenders. As you score increases from this point forth it means you are getting closer and closer to being the ideal customer and as such you have even more leverage to negotiate the rates, and opportunity that you must take up if you have the chance.

In order that you make the best of the situation where you need the loan it is vitally important to plan ahead. If you foresee yourself buying a house in a years time then it is highly advisable that you get a copy of your complimentary credit report and study where you can improve on so that your credit scores are up when the time comes where you need to apply for the loan. Planning ahead is one of the keys to success.

Another thing to remember that understanding and trying to fix your credit score is just one part of the whole mortgage loan application process. Another important aspect is to keep at it and not give up especially if you have a bad credit history that you can’t change. If you persevere you will find the right loan package that will suit your needs eventually.