If you are trying to secure a loan with a low Fico score you have a few obstacles in your path. Most mortgage lenders will only lend at lower Loan to values to borrowers with low Fico scores. Your interest rate will also be higher with a low Fico then a borrower with a high Fico score.

Many times compensating factors can overcome a low credit score on certain mortgage loan programs and help you still obtain a loan with your low fico. A few examples of some compensating factors are items such as a lot of liquid assets, a 15 year term versus a 30 year term, an extremely low debt to income ratio, low loan to value, great job time, and decent credit even though you have a low fico score.

If you have low FICO scores or bad credit, it is a matter if time to re-build your credit history and add positive trade lines to to your credit report. Obtaining a secured credit card and/or being an authorized user of someone who has excellent credit can help increase your scores.

Some loan programs, such as FHA loans, will review your past year of credit history rather than solely your credity score. Be sure to make every effort to keep your mortgage history up to date. This will help you get the best terms despite a low credit score.

Loans with low FICO credit scores will have a higher interest rate and lower loan to value amount than high credit scores. This is because lenders believe you are less likely to repay the loan due to the low credit score.

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