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Bad Credit Loans

If a couple or individual has hit on hard times due to a divorce or downsizing of their job, they may have also had their credit knocked down a few pegs to the 'bad credit level'. They may be worried that they cannot obtain a loan for a new home now that they have bad credit but this is not true. Thousands of people with bad credit have gotten the loans they need to move into a new home.

Bankruptcy's have a waiting period of four years before getting a relatively decent rate on a loan. The blemish to your credit will stay there for ten years and the time between filing again is seven years. If you have been forced into a foreclosure, FHA loans will allow you to apply for one of their loans after two years and this means you could qualify for a low interest rate of only 3.5 percent.

There are what's known as 'hard money lenders' and they only require a six month waiting period after a foreclosure or bankruptcy before they will extend you credit for a home loan. The drawback is that the down payments will be pretty high at 20 to 35 percent of the total loan. Plus, the interest rate will also be on the high side and they attach prepayment penalties if you sell before the loan is up.

Different than hard money lenders, are the subprime lenders which no longer make 100 percent home loans. This type of lender is for the better credit score group.

There are a few things a couple or individual could do after a bankruptcy to improve their new, fresh start credit score. They should obtain a credit card. This is verily easy because the credit card company knows they are starting over and have no other debit. Be sure to pay it every month and any other bills you accumulate. Plus, show a steady income, preferably from the same employer for as long as you can. And lastly, save at least a down payment of 10 percent.

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