If you have imperfect credit, you’re not alone. Many people struggle with bad credit for varying reasons. For instance, you might have been a victim of recession and lost your job unexpectedly. Or perhaps you might be in the middle of the divorce process. Sometimes, bad credit is a result of a failed attempt in business, financial mismanagement or poor spending habits.

If you plan to apply for a mortgage loan anytime soon, then you need to start working to improve your bad credit. The good is that you can still apply for a loan as long as your bad credit is in the past. On this post, let us take a closer look at the steps that you can do to increase your chance of getting approved for a mortgage loan.

Clean up your credit report. Request for a copy your credit report from each of the three major credit bureaus. Carefully examine your report. See to it that it contains no errors, unauthorized charges or inaccurate information. All consumers have the right to dispute errors in their credit files and this is a quick and smart way to boost your credit score.

If there is a negative remark in your report that is older than 7 years, be sure to ask the credit bureau to remove it from your file. For instance, if you filed for bankruptcy before and it has been 7 years, the record should not be included in your most recent credit report.

Improve your credit score. What else can be done to improve a low credit score? Of course, you must make sure that you have no past due debts in any of your accounts. You need to promptly submit your payment to show creditors that you are seriously taking care of your personal credit rating. If you have bad credit, you cannot afford to make another late payment. In addition, you must keep your credit usage minimal. Ideally, you should not use more than 20% of your credit limit.

Check out FHA loans. The FHA Government Loan Program is also worth checking out especially borrowers with bad credit. Find out if you can qualify for an FHA loan. Compared to banks and commercial lending companies, FHA loan lenders are generally less stringent when it comes to credit requirements and they offer lower interest rates.

Do not submit multiple applications. Do not submit multiple applications to various lenders at once as this can do more damage to your credit score. Keep in mind that too many inquiries in your file can send a negative impression to a potential lender and it can cause your credit score to dramatically drop even further.

Prepare for down payment. Because you have less than perfect credit, lenders would most likely require you to submit a higher down payment so be prepared for the upfront cost. However, you should try to negotiate for a lower rate of interest or reduced monthly payment on account that you have paid a larger down payment.