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I Want to Buy a Home, but I Have Poor Credit. What Can I do?

Updated: Sep 14, 2023

It's no secret that having poor credit can make it difficult to get a mortgage. After all, your credit score is one of the key factors that lenders look at when determining whether or not to give you a loan. But just because you have bad credit doesn't mean you're doomed to a life of renting. There are steps you can take to improve your credit score and get approved for a mortgage.

Here are a few tips:

1. Avoid late payments and arrange payment plans for late bills.

Late payments can do serious damage to your credit score, so it's important to make sure all of your bills are paid on time, every time. If you have any late payments, contact the creditor and arrange a payment plan. It's possible you may have gotten behind in the past and used your credit card to help you get through a tight squeeze. That's understandable if you don't have another option. However, you'll want to pay this off ASAP since the high interest on a credit card will keep you on the payment conveyor belt for a long time. Worse yet, if you get behind and fail to make a minimum payment this will really harm your credit.

2. Track expenses and make sure all of your bills are paid on time, every time.

Keeping track of your expenses can help you stay on top of your bills and avoid late payments. Make sure to pay all of your bills on time, every time. If you are finding it's hard to stay on top of expenses, it can be helpful to do an audit of all your monthly expenses to get a sense of where it's going. Once you know what you're spending your money on you can start making conscious choices about where you can cut back to ensure you are living within your means, and ideally putting away some savings for a rainy day.

3. Reduce your credit debt by paying off your credit card balances and any balances on your line of credit.

High credit debt can hurt your credit score, so it's important to pay down your balances. Start with your high-interest credit cards and then pay off any balances on your line of credit. This can be viewed as a snow ball approach, you pay off your higher interest debts first, that way your minimum payments go down quickly. Then when you've paid off your most expensive debt (i.e. a credit card), you can add the additional savings to pay off your next most expensive debt (i.e. car loan, line of credit, etc.), then the one after that, etc. Gradually you'll get to a point where you can eliminate any bad debts (i.e. consumer debts), so that all you have left are those debts that are building your financial future (i.e. a mortgage), and your previous payments turn into additional savings that you can start investing.

4. Increase the credit limit on your credit cards.

Increasing your credit limit can help improve your credit score, as long as you don't use the extra credit and end up with more debt. This will vary from person to person. If you know you can manage credit well, then this move will only help you in the long-run. However, if you've struggled with debt in the past, and don't have a good relationship with credit, it might be better to follow the advice of Dave Ramsay and cut up every last credit card so you can't get into trouble with debt again.

5. Review your credit before applying for a mortgage.

Checking your credit report before you apply for a mortgage can help you identify any errors or negative items that may be dragging down your score. Although people sometimes worry about negatively affecting their credit by pulling a credit report, don't worry! The occassional credit report won't have any material impact on your credit, and it can help you reveal some errors or bad habits that can be identified and corrected. Once these problems are caught and corrected you'll be on your way to good credit in no time.

Taking these steps can help you improve your credit score and increase your chances of getting approved for a mortgage. So don't give up on your homeownership dreams just because you have bad credit. With some time and effort, you can make it happen.


I am a Victoria based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty and hard work have been important pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!

I service Vancouver Island, but my focus is on: Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.



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