Getting Approved: Tips for landing your dream home despite bad credit

Updated: Mar. 4, 2021 at 11:12 PM CST
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JACKSON, Miss. (WLBT) - Experts predict that 2021 will be a booming year for home sales all over the country. Historically low mortgage rates are making the dream of homeownership attainable for many.

However, there are some who, thanks to the pandemic or poor financial choices, have taken a hit. For those with low credit scores, programs that they were likely to qualify for are no longer available.

This means buying a home can often seem out of reach.

Bernard Bridges is the President of Hinds County Trustmark National Bank. He says even though now is a great time to buy, those with bad credit are going to have an even tougher time getting financed.

“So for someone who may say, ‘I’m not gonna worry about it. I’ll pay what I can, when I can, how I can, because I don’t need a high credit score for anything,’ It’s suicide. Absolute suicide,” Bridges said.

Your credit score can determine whether banks accept you.
Your credit score can determine whether banks accept you.(WLBT)

Bridges says a credit score is a depiction of your past credit history--a score that tells the financial institution that you will pay your bill on time, or how likely you are to default.

“We are in a real estate cycle we would call a seller’s market. There are more buyers out there than there are people selling their homes,” Felix Walker said.

Walker is the owner/broker of the W Real Estate Agency. He works with clients from all different financial backgrounds, but admits in recent months, it’s been tougher to get his clients with lower credit scores into homes.

“Used to be, you could get by with a 600 or 620,” Walker said. “But we’ve seen, especially since COVID hit, and I think it’s because a lot of the banks are taking a little more of a risk as far as people losing their jobs, being laid off, so now they raised that credit score limit up to 640. However, there are still some programs that you can get as low as a 580, but they are a little bit harder to get qualified and done.”

That’s when a credit counselor, like Krisha Boone, is called in to help.

“So I basically help people fix their credit. So I am disputing negative items on their report, sometimes 50-60 inquiries that they did not know they had,” Boone said. “I dispute those and I’m also helping people build their credit. When they come to me, we analyze their credit score. If it’s from a mortgage company, I got mortgage companies send clients to me, realtors send clients to me, so we analyze first, we see what’s negative and then we dispute those items.”

Boone is a board-certified credit specialist. She works with clients who need help boosting their scores into an acceptable range. She says student loans are one of the biggest problems people have with their credit.

Your credit score can determine whether banks accept you.
Your credit score can determine whether banks accept you.(WLBT)

“Consolidate those student loans,” she said. “Make them one and start some type of repayment plan. That’s the only way to get those accounts out of the negative.”

Once credit issues are eliminated, the road to buying a home can seem clearer.

Rashida Walker, a realtor with W Real Estate Agency, says guiding credit-challenged buyers to home ownership is a joy.

“It’s a different story for someone who may have fallen on hard times,” Walker said. “And they literally just didn’t think that they would be able to buy a house and to see them go into home ownership after really working to get there. It is very fulfilling; its like the biggest blessing ever.”

Stricter credit restrictions means that people really need tp stay on top of their credit and work hard to pay bills on time.

“I start with where they are, and starting where they are is a roadmap to getting them where they want to go,” Walker said. “And so it’s tough some times, but if you stand beside the client and put them with the right lender, put them with the right credit expert, you can see a house at the end.”

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