Don’t Let Anyone Tell You You Can’t Get a Mortgage With Bad Credit. Here’s How You Can Do It

bad_credit_scoreHaving no credit or poor credit is a major road block to getting a loan because you’re viewed as a high risk customer who might default. It’s just a fact that until you raise your credit score, you won’t fit the standard lending guidelines that traditional, big banks have to follow. Follow: Reality of Bad Credit When Buying a Home – FORBES.

The best thing you can do while you wait is raise your credit score so you can qualify for a traditional loan. Start paying your bills on time, consistently review your credit score and don’t overextend yourself on debts. Here are some options to consider if you’ve been turned down for a loan:

Use a Home Equity Line of Credit
If you have equity in your property, you could get a low-interest, tax-deductible line of credit to spend it in any way you like. If you have reliable income and are diligent about paying down an equity line, it’s an inexpensive option, regardless of your credit score. Check out: More Investors Turn to P2P Lenders for High Yield – CNBC.

Apply to Credit Unions
Credit unions are similar to banks but are owned by their member. They are nonprofit organizations that pass along earnings to members in the form of lower fees and higher customer service. You should call them to find a credit union near you; then, compare loans from several institutions so you know you’re getting the lowest interest rate possible before signing on the dotted line.

Get a Peer to Peer Loan
Peer to peer or P2P lending has been around since the early 2000’s. It’s an online platform that allows you to borrow directly from an individual instead of from an institution. Borrowers post a loan listing that includes the amount they want and why they want it. Investors review loan listings and choose the ones that meet their criteria. Peer to peer lenders screen all applicants and check your credit, which becomes part of your loan listing.

Take a Loan from Family or Friends
Consider asking a friend or family member to loan you the money. A loan is a serious business transaction that’s clearly documented and legally recorded, and is not to be taken lightly. A family loan must benefit everyone involved and should really be a last resort. You don’t want to risk relationships over money. See: Five Pro’s and Con’s of Using Credit Unions.

Appeal to a Co-Signer
If you don’t have a friend or family member who’s willing to give you a loan, perhaps one with good credit would be willing to co-sign for you. Just remember that if you don’t repay the debt, the creditor will look to your co-signer for full payment. For further reading on co-signers, check out: How to Keep Family & Friend Loans Strictly Business –


  1. I would never get a loan from a non-traditional lender if I couldn’t get a loan. If you have to try to go around the bank to get a loan, it means that you aren’t ready to have a loan (obviously). Don’t try to make something be. Save your money up, get a better job, work on your credit, then buy a house.

  2. Cheap home loans are honestly a total ripoff. If you don’t have the money right here, right now, don’t buy a house. You really will end up getting messed over in terms of finances, and your credit.

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