18 Apr 2022

What Causes Poor Credit for a Mortgage?

Causes of Poor Credit and Mortgages

Individuals benefit from checking their credit reports monthly. Errors on credit reports can occur, although not common. The causes of poor credit are several. Mortgage House outlines a few to give you a better overview.

Late Payments. Whether or not an individual pays their bills on time is important to the home loan lenders. On-time bill payment is 35% of a credit score.   

Repayment Defaults. Late payments are one thing, repayment defaults are another. When you fail to make your repayments at all, it shows up on your credit.

High Debt Balances. It’s nice to qualify for high revolving account limits. However, you should never max them out. If you do, pay the balances back down promptly.

Account Charge Offs. Charging off an account hurts credit scores. It lowers the credit available to you. Thus, your score reflects it for some time.

Errors. Sometimes credit reports have errors. Australians can obtain a copy of their report once a month for free in some cases. Thus, it’s a good idea to review it before applying for a home loan. The strategy gives homebuyers time to put themselves in the best financial position possible. 

Lenders will take a look at the credit scores of homebuyers who seek to finance their purchases. If your score is closer to 500 than 700, you might qualify for the Mortgage House bad credit home loan. Our loan specialists can provide more information. We also offer our business loan products to clients.

Causes of Poor Credit and Mortgages Conclusion

Several causes of poor credit exist. However, individuals can prevent hits to their credit score by practicing responsible financial skills. To explore how your credit impacts your ability to finance a home purchase, contact our Mortgage House loan specialists.

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