Bad Credit Guide:

If you have bad credit then this guide is for you. First thing we need to do is define what is bad credit. Bad credit is someone that has low credit score like 550 to 600 and/or if you have any messages on your credit report like bankruptcy, collections and consumer proposal that shows lack of credit management.

So what do you need to do to get a mortgage if you have low credit scores or worst bankruptcy, collections or consumer proposals?

1.Low credit score:

-this one is a 2 step process. The first step is to find out what is causing the low credit score and the second step is to find out how you can fixed it. If you want to improve your credit score as fast as possible, it would be a good idea to know how does your credit score work and which part you can work on to improve your credit score the fastest.

The 5 areas Equifax look at for your credit score:

Payment history 35%

credit utilization 30% ( Ps try to keep it below 30 to 40% of your credit limit to improve your credit score faster)

credit history 15%

public records 10% ( type of credits you have)

inquiries ( number of inquiries)

2. Collections and Consumer Proposals:

-If you have either collections or consumer proposals on your credit report, it is not good news. But it’s not the end of the world. You just need time or willing to take a higher rate than average.

-So if you want the lowest rate possible and you got time to wait then this is what you need to do:

1. pay off all the debts that’s on your collection or consumer proposal
2. re-establish your credit by opening 2 trade lines or credit products with a major financial institution
3. You will need 2 years history after your 2 credit products like a credit card and overdraft has been opened

-if you dont want to wait then their are b lender programs just for you called the bruised credit mortgage program to get the mortgage you need. But the rate is going to be higher and you will need to pay broker and lender fee.

3. Bankruptcy:

-Bankruptcy is the worst message you can have on your credit report. But its the same process with increase difficulty. Instead of needing 2 years to get your credit re-establish, we will need 6 to 7 years.

legend:

collection is when you are not paying your debts but you have the ability to pay

consumer proposal is when you have too much debts. So you talk to your creditors to reduce your debt amount or else no one is getting paid

bankruptcy is when you give up paying your debts and the court needs to determine what can be used to pay your debts. Bankruptcy happens alot for business failures.