Credit scores are critically important when buying property, but a poor score can be improved or overcome by other means.
In the past, buyers with poor credit scores were able to borrow money under programs called subprime loans. These buyers usually paid very high up-front fees and higher interest rates.
They may have had penalties to pay if they attempted to refinance into something cheaper. Rather than offering them fixed-rate loans, lenders forced such borrowers into adjustable rate mortgages that could result in very high monthly payments.
Because of the heavy focus on the high number of subprime delinquencies and foreclosures, these practices are no longer that common. It is again difficult for people with poor credit scores to borrow money.
You can overcome this hurdle in several different ways. They include the following.
• Be patient and improve your score. Go to the website for the Fair Isaac Corporation, www.myfico.com, for advice. You can also call your local HUD office to obtain copies of pamphlets on the subject.
• Obtain a guarantor with good credit. That will cancel out your own poor score.
• If you have a poor credit score but significant liquid assets (cash, stocks, or bonds), you can often borrow money despite your score. You might have to give the lender additional collateral in the form of some of your liquid assets.