If you have bad credit or credit card debt it is often extremely difficult to acquire a new loan. Most lenders will overlook your credit history and if you have a string of missed payments or defaulted accounts, they will deny your loan. If you have bad credit and attempt to get a mortgage loan, it is almost a certainty you will be denied. However, there is one way you can acquire a mortgage loan if you have an unfavorable credit history, and that’s with a no credit check mortgage loan. No credit check mortgage loans may seem like an answer to your lackluster credit score, but you will end up paying for the leniency of the lender.
When you choose the option for no credit check, you are basically stating you’d wish to have your bad credit ignored. A mortgage loan is traditionally the highest amount of loan on the market, so if a no credit check mortgage loan is your only option, be prepared for the highest amount of interest possible. The interest on conventional mortgage loans relies on your credit history and the availability of collateral, among others, and the negative factors on your report are just as influential as the positive. Some of the negative factors are:
- two or more 30-day delinquencies in the past year
- any 60-day delinquencies in the past two years
- bankruptcy within the past five years
- a debt-to-income ratio of 50% or above
- a credit score of 600 or lower
If you have one, two or more of these flaws on your credit report, your only option may be a no credit check mortgage loan. You may think that the interest rate on your mortgage loan rests solely on your credit score, but there are a couple ways you can counteract your bad credit. If you foresee a no credit check mortgage loan in your near future, do your best to have all of your payments on your other loans on-time and in-full for at least six months prior to your application. This will show you’ve decided to take charge of your debt and displays a newfound sense of responsibility, which will work in your favor. Also, if you show proof of solid employment and steady income, this will show you have the means to pay off your no credit check mortgage loan every month. Having these representations of good faith by your side will brighten your credit image, but you must remember that you are attempting to get a loan with no credit check, so your interest will still be much higher than average.
The government enacted The Home Ownership and Equity Protection Act of 1994 to prevent any lender from using misleading information. The Truth in Lending Act protects the borrower from lenders using extremely high interest rates and fees on loans such as a no credit check mortgage loan, so there are laws in place to ensure you’re not being over charged. The fact is, however, these types of loans carry an interest rate that easily exceeds the realm of a reasonable rate, but that is the main stipulation of getting a no credit check mortgage loan.
