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Most lenders today use an automated system to determine whether or not you would be a good candidate for a mortgage loan. But if you're deemed ineligible by the system you might still qualify for a loan. Lenders can go the route of manual underwriting and set your low score aside if you can demonstrate that you are financially stable in other ways. As an example of this, you might be able to show that you’ve been making your rent payments on time for the past year or more or that you have enough cash reserves to carry you for at least six months. A high income and low debt payments could also show that you are less risky as a loan candidate. Plus, you should be ready to explain why you have a bad credit score to begin with. If you have a large amount of consumer debt that's gone to default this will signal irresponsible behavior and use of credit. However, if the majority of your debt is student loan debt this could tell a completely different story.
Try to get a private mortgage
When you think of getting a mortgage the first thing you undoubtedly think of is to go to a large financial institution. Fortunately, there are other ways to get a loan when you have bad credit such as a private mortgage loan. These loans can come from anybody that has the cash on hand to pay for your home in full. For example, this could be a friend, a private lender or a family member. You would pay for the home with a loan based on the terms accepted by both parties. There are some potentially big downsides to this type of loan like high fees and a high probability of relationship turmoil. However, if you can get a private mortgage this essentially eliminates the fact that you have a poor credit score.
The bottom line
Fortunately, if you have bad credit there is never a never you’ll you get a loan. You could still get a mortgage despite that little three-digit number. Keep working, explore all the alternatives you can find and don't give up hope. You will ultimately be able to get a mortgage and realize that dream of owning your own home.