Are these bad credit myths stopping you from buying home in Houston?
Bad or non-existent credit hampers home buying plans of many people in Houston. A good credit score will certainly be a big advantage when you apply for a mortgage, but bad credit doesn’t necessarily mean that you won’t be able to buy a home.
Here at Shop Owner Finance, we have helped hundreds of families and individuals with bad credit to become homeowners. Buying a home with poor credit is not as difficult as you may believe.
The reason credit-challenged people feel helpless is that there are many myths about bad credit.
Myth#1: you can’t buy a home with bad credit in Houston TX
This is one of the biggest myths people have about bad credit score. Your credit score determines your creditworthiness, but a mortgage is not the only financing option you have if you are planning to purchase a property.
For example, we help people buy homes with owner financing. You can explore many other options to finance your home deal. Most of these mortgage alternatives are legit. Be sure to weight all the pros and cons before choosing which financing method suits you the best.
Myth#2: Bad credit can’t be fixed
If you have bad credit, it is entirely possible for you to fix it. However, it takes time, discipline and patience.
Many of our clients bought home with owner financing and improved their credit score by making their owner financing payments on time. Our system ensures that your payments are reported to credit bureaus. Our clients are free to refinance with a traditional lender once their credit score crosses a certain threshold.
Myth#3: You only need to order credit report from one credit rating agency
Equifax, Experian, and TransUnion are three credit rating agencies in the U.S. they use different methods to calculate your credit score. As a result, your credit score calculated by Equifax could be different from the one calculated by Experian. Make sure to check your credit scores from all three agencies and find out if there are any discrepancies
Myth#4: Making a lot of money is more important than financial discipline
No matter how much money you make, your credit will suffer if you are not financially disciplined. Your credit score is calculated based on the ratio of your existing debts to your existing income. Some other factors taken into consideration are your bill payment history and employment history.
It’s not necessary to make a lot of money to have a good credit score. Keeping your debts low in relation to your existing income and paying bills on time is more important.
Myth#5: Your rent is necessarily reported to credit bureaus
Most renters in Houston believe that their rental payments are helping them build credit. It’s not entirely true. It depends on whether your landlord is reporting the payments to credit rating agencies or not.
Most landlords don’t bother, so paying rent month-after-month, year-after-year doesn’t necessarily improve your credit.
Make sure that your rental payments are reported to credit bureaus.
Myth#6: You should believe credit reports blindly
Credit reports often contain discrepancies and don’t present a true picture of your credit situation.
You shouldn’t believe blindly what credit reports say your credit score is. Make sure that all the information on your credit report is correct.
Incorrect information can lower your credit score. If there find anything wrong, you should immediately dispute it with credit rating agencies and financial institutions.
Myth#7: You don’t need down payment if you have good credit score
Many people believe that they don’t need to arrange for a large down payment if they have good credit.
There is no denying the fact that some programs such as FHA loan can help you obtain a mortgage with a low down payment, but you will end up paying Private Mortgage Insurance (PMI) in addition to your monthly installment including principal and interest. PMI can amount to thousands of dollars over the entire life of the loan.
Myth#8: You should close credit cards to improve credit before buying home in Houston
Since your existing debts determine your credit score, most home buyers in Houston TX jump to the conclusion that they should close their credit cards and other debts to improve their credit.
This strategy will harm your credit rather than improve it. This happens particularly when you close credit cards that still have outstanding balance. Instead of closing cards, you should lower the debt and pay your bills on time.
Myth#9: You should check your credit score only when you are buying home
Most people try to find out what their credit score is only when they plan to buy a home and apply for a loan.
You should keep a regular tab on your credit score even if you are not planning to apply for a loan. It will help you determine whether or not you are managing your credit well. Your credit affects your life in a lot of different ways.
Stop assuming that you can’t buy a home in Houston with bad credit. This assumption prevents many people from getting on the property ladder.
Consult with a certified professional to know your options. Set an appointment with us to know more about our real estate brokerage service.