Your credit score is one factor a loans company will check when you apply for a stated income loan. In some cases, you may need to take steps to repair your credit score if it falls below certain criteria. A home loans company for self-employed people may still accept your application for a bank statement loan if your credit score is as low as 600.
What can you do if your credit score is too low to get for a stated income loan? In this case, you will need to improve your credit rating. Thankfully, boosting your credit score to an acceptable level may not be as difficult as you think.
Here are 4 ways to improve your credit rating.
1. Check your credit report
The first step to know how to repair your credit score is to check your report for inaccuracies. You should review all data on the report including your list of credit cards or debts you are still paying off. If there are inaccuracies, you should submit proof of these to the credit reporting agency.
2. Control your spending
The next way to help improve your credit score is to limit your amount of debt and reduce your spending. For example, it’s important to ensure you are not using too much credit. So, you should start reducing the amount owed on credit cards and keep balances to a minimum.
3. Pay bills on time
Unpaid bills or paying bills late can make a serious dent in your credit rating. A local stated income loans office applications need to know that you are serious about paying off debts in a timely manner. This is especially important for self-employed applying for a home mortgage. Remember, late bill payments can impact your credit score for up to 7 years.
4. Be careful with credit
If you are planning to apply for a stated income loan, don’t take out any new or unnecessary credit. Multiple inquiries for credit can knock precious points off your credit score. If you have unused credit cards, there is actually no need to close them as long as you are not paying annual fees on them.
In some cases, if you are applying for a bank statement loan at LBC Mortgages, it may be best to wait until your credit score improves. However, remember that you can still apply for a home loan even if your score is too low for other lenders to approve you.
At LBC Mortgage, we know how difficult it can be to get a home loan if you are self-employed. Very often, mortgage lenders are skeptical of the financial stability of people in self-employment. This can be very frustrating, especially if you have a healthy cash-flow situation from self-employed work.
However, if you are self-employed, home loans companies can offer you stated income loans to buy your first home.
How can you find the best mortgage lender in California if you are self-employed?
When applying for a home loan as a self-employed person, the process is similar to applying for any kind of loan. You can apply in person for a stated income loan at a local office, by telephone, or online.
When looking for a home loans lender, what should you expect from the application process?
Paperwork required for a stated home loan
Just as when applying for any kind of home loan, getting the right paperwork in order is essential for a stated home loan. Your home loans company will require you submit your bank statements for the previous 12 months.
For people in self-employment, this is good news. When applying for a stated home loan is you don’t have to provide any tax returns or W-2 statements. This is one of the main differences between a standard mortgage and a bank statement loan.
So, the best kinds of mortgage lenders for the self-employed take into consideration as much of your financial history as is necessary to get you the best deal. This means that stated home loan lenders count all of your cash flow as income.
Depending on the type of self-employment you are involved in, lenders may require some more documentation. For example, contractors can provide proof of upcoming contracts or, you can provide proof of your assets or other relevant financial documents.
So, if you are self-employed and need to get a home loan, you know that it’s not harder to get approval than people who have a regular salary or wage. As with all loans, the lender checks to see you have an adequate credit rating and have evidence of financial stability.