FRANKLIN LIVING— Buying a home is probably one of the most exciting and fulfilling events we get to experience. It can also be one of the most terrifying – especially if you are starting out with bad credit. Don’t lose hope; there are steps you can take to help with the challenges of securing a loan and working toward rebuilding your credit.

Can you get a mortgage loan if you have “bad credit”? Many times, the answer is yes, but you will have some trade-offs. The thing about bad credit is, no two people are the same. There are many varying factors. Securing a loan might depend on how much you have for a down payment, what your debt load looks like, your income and whether you have any debts in collections.

You will likely also pay a higher rate than a conventional mortgage. The lender you use will play a factor because all lenders have different requirements. Be prepared for a higher monthly payment because of the higher interest rate, but working to get your credit in shape will allow you to refinance your mortgage at better terms later on.

Do your research on loan options to see what type of loan will work best for you, and you might even choose to hold off on buying until you have a chance to repair your credit.

So, how do you rebuild your credit? Begin by working on your credit score and credit standing. Nobody likes to hear this because it takes time and patience, but raising your score and improving your financial situation will give you better loan options.

• Improve your payment history – The saying “pay your bills on time” is essential because your history can account for 35 percent of your score. Make this a top priority!
• Don’t max out your available credit – The amount of your credit you are using matters. Work to start applying extra payments to debts to begin working those balances down sooner. Having fewer or reduced monthly debt payments helps your debt-to-income ratio.
• Increase your income – Getting a second job or asking for that raise might be necessary if you want to speed up debt pay-off. Bonus: The extra income also helps your DTI ratio! Further, having at least a two-year job history is important for loan qualification.
• Wait it out – This is definitely the most challenging part. Necessary changes to your credit score will not happen overnight; you have to let time work its magic. Setting small, incremental goals will help keep you on track and help you see the progress you’re making.

Enjoy those small victories. Every bit of progress is getting you closer to your goals!

Emily Mays is vice president/chief administrative officer at Community Spirit Bank in Red Bay, working in finance for 15 years. She is an enthusiastic social media marketer, financial literacy advocate and go-local supporter. She lives in East Franklin and has one daughter, Lola.