How Can I Buy a House in Las Vegas with Bad Credit?

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Does looking at home loans in Las Vegas fill you with dread? Having a good credit score is important for many major financial transactions, and that includes buying a home. To qualify for a conventional mortgage Las Vegas, you’ll need a minimum FICO credit score of 620. However, if your credit score is lower than the optimal number, it’s still possible to secure a mortgage for your next home. A loan officer Las Vegas can help you understand the options available to buy a new home even if you don’t have good credit.

What is a Credit Score?

A credit score essentially shows a mortgage lender how responsible you are with your finances. A number of factors influence your credit score, including whether or not you pay bills in full and on time, the number of credit cards you have, and any debt that you owe.

Credit scores are grouped into four main categories:

  • Excellent
  • Good
  • Fair
  • Poor

On the FICO scale, an excellent credit score is a number over 720. A good credit score ranges from 620-679. A fair credit score is a number ranging from 580-619. A poor credit score is below 579.

Even if you have a credit score that’s considered fair or poor, it is still possible to buy a home in Las Vegas.

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How to Get Your Credit Score

If you don’t know what your current credit rating is, you’ll need to request a credit report from one of three main federal bureaus, which are Experian, Equifax, and TransUnion. Collectively, the three agencies are responsible for gathering, analyzing, and distributing information to consumers about their credit scores. You can get a report from any one of the bureaus or all three to ensure your score looks accurate across the board. Once you get your credit report, check it to make sure that the information is correct. If anything seems inaccurate, you’ll need to dispute the error with the bureau that issued the report.

Boost Your Credit Rating

If your credit report shows a credit score lower than what you need to qualify for a conventional mortgage, you can choose from several options. One is to take steps to improve your credit score before applying for a mortgage. This way you’ll be able to secure a better mortgage and potentially offset some of the higher fees that are often tacked on to mortgages for bad credit scores.

One way to improve your credit score is to reconcile all outstanding debts that you owe. If you have debts from car payments, student loans, medical bills, or other sources, start by contacting the debt collection agency responsible for your payments. Ask how much you need to pay to have your account removed from collections. It’s important to make sure the account is fully deleted from the collections record, as even a paid account that remains on your record will negatively impact your credit score.

Whether you are paying bills or debts, making payments on time is another way to boost your credit rating. Lenders will like to see that you haven’t made any late payments in the past year or even longer. Consistently paying your bills on time shows a lender that you are capable of making timely payments. Along with paying bills when they’re due, paying your bills in their entirety rather than just making minimum payments also has a positive influence on your credit score. If you have credit card bills, try to pay them down as much as you can each month. Ideally, you should have at least a 30% utilization ratio. Maintaining a good utilization ratio indicates to a mortgage lender that you are capable of using your credit lines responsibly.

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Make a Larger Down Payment

If you can afford to make a sizable down payment, consider doing so to reduce the principle payment on your loan. If you don’t need to borrow as much money, a lender is more likely to approve your loan application. Even if you have a less-than-perfect credit score, making a large down payment can help you qualify for a better loan. That’s especially true if you can also demonstrate a good bill payment history and show that you have made timely and complete credit card payments.

Choose a Private Lender

Another way to get a home with poor credit in Las Vegas is to use a private lender. A private lender is a trusted individual such as a family member or a friend who can supply the funding required for your house. You can then work with the individual to arrange a repayment, keeping in mind that you’ll still want to create a formal mortgage agreement. Sometimes, the homeowner who is selling the home will offer to keep the deed in his or her name until you make the last loan payments.

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Consult an Expert

Consulting a housing counselor from the US Department of Housing and Urban Development (HUD) is especially recommended for first-time home buyers. A housing counselor will explain to you how the home buying process works and the role of your credit rating, which includes your mortgage options. Many consultations are available for a low fee or even free of charge. They are designed to be educational and informative in nature to help you prepare for home ownership. If you aren’t sure where to look for a qualified housing counselor, the HUD website has a searchable directory for local experts.

Apply for a Loan

Even if you can’t boost your credit score, it’s still possible to finance a home. Keep in mind, however, that you’ll likely end up with a higher mortgage rate by applying for a loan if you have a less-than-perfect credit score. Lenders add on higher mortgage rates to certain loans to protect themselves in case the borrower defaults on the loan. Even if they seem minimal, higher mortgage rates can add up to a significant amount of money over the course of a loan’s lifetime. Government-backed mortgages or an FHA loan Las Vegas are available for people with low credit scores.

If you’re eager to buy a home but don’t have a great credit score, contact us for assistance. We can help you understand the options available and make the best choices based on your situation and goals.

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