Many people are locked out of buying a home due to poor credit scores. Often times, these individuals are working on improving their credit, but this can be a long and arduous process and people don’t tend to see overnight improvements. This can make it difficult to get approved for a mortgage and own your own home. Many people don’t have poor credit due to past financial mistakes, but have a low credit score simply because they choose to pay for items with cash instead of using credit cards. This is especially true of the millennial generation who hasn’t had the opportunity to build credit on top of student loans and other debt.
There are a few options to buy a home with little to no credit:
Buy a house with Cash:
Rather than relying on your credit to obtain a mortgage, buy the house outright with cash instead of a loan. This can often get you a great deal on the home and compete more effectively with other buyers. However, this isn’t an option to most of us.
Wait to buy a home and focus on improving your credit:
Another option is to focus on improving your credit score before buying a home. Look into credit cards and credit-repair options that will enable you to consolidate your bills and start earning a positive credit history. This does take time however, and negative items on your credit report remain there for 7 years so be prepared to invest a lot of time into this before buying a home.
Rent-to-Own a Home
Renting to own a home allows you to focus on things like improving your credit while you are living in the home you intend to buy. This is often the preferred solution as you get to live in the home and see what the house and neighborhood is like, you don’t have to move around as much or deal with living in an apartment, and you are working on owning the home you live in.
There are many benefits to renting to own, and many rent to own opportunities in your area that you can explore today.