1. The first thing you need is your tri-merge credit score. I would suggest going to MyFICO.com because it will NOT affect your credit going there. Reminder, make sure you run the tri-merge with all three credit bureau's

2. What is your credit score?
Most mortgage lenders will use the middle of the three scores. Your goal should be at least a 580 if you are going to do a full doc program and 620 if you are going stated, 640 stated will give you more options.
* Don't worry if not 580, I will go into a few steps to help you correct the errors and/or how to correct them.
* Also check out the credit repair articles I have included on here.

3. Is your middle credit score is below 580, you can either go to a credit repair company or do it yourself. Doing it yourself is easy and I have included articles here which will help you repair it also. Remember, it is easy, just takes time. Before you know it, your credit will be cleaned up.

4. Do you have a bankruptcy or foreclosure in your past? Has it been 2 years since it was discharged? If it has, great but remember to check on the credit report to match up accounts on the BK are also stated bk. Most subprime lenders will give you a 100% loan if your BK is 2 years old. If your BK is only 18 months out, you can get a 95% loan.

5. You will need to document 12 months of recent mortgage or rental history. If you rent from a property management company we will need a Verification Of Rent completed. The form will be supplied by your mortgage lender or broker.
If you rent from a private landlord, you will need 12 months canceled checks/or money order receipts with no payments over 30 days late. Copy of front and back of checks to prove it. You cannot prove your rental history if you pay your landlord cash every month, unless they are a property management company.

6. Look at your credit report. Do you have a credit line that has a 12 month history reporting? If so and as long as you have no more that 2x30 day late payments then move on to the next step. You will have to document why the late payments were made with the underwriter when the time comes.

7. Look at your credit report again. Do any of your credit lines have a high limit of at least $2,500. If so, move to the next step.
* $2,500 is what most lenders want to see on your credit

8. Now take one more look at your credit report. You will need 1 more additional open credit line reporting on your credit report. (It does not matter how long it has been open or how much the credit line is for).

There are always exceptions to guide lines and yes, they are changing all the time. If you us this as a general guide line, you will have a better understanding of how bad credit loans are looked at by underwriters.

This article should not be construed as an advertisement to lend. These are the steps that I go through when trying to pre-qualify a client that has credit problems. There are many more factors to determine so please discuss this with a qualified mortgage professional.

Bottom line, if you are in Foreclosure, we can still get you a bad credit mortgage, and for a 100% LTV refinance with bad credit, it would be called a bad credit mortgage but in truth, it helps you and that is what matters the most.