In the past, having bad credit could stop your mortgage from being approved. These days however there are so many bad credit mortgage lenders that it is almost easy to get approved for a mortgage, even if your credit is tarnished. Now even the larger mortgage lenders are joining in, meaning higher approval rates and lower cost loans for everyone thanks to the increased competition. Bad credit mortgage lenders know that these types of mortgages are a huge business.

The bad credit mortgage lenders, also known as sub-prime lenders, work the same way as traditional mortgage lenders because they use your FICO score to determine your credit worthiness. FICO scores are reported by the big three credit reporting agencies, namely Trans Union, Experian and Equifax. In general, a FICO score below 620 is considered bad credit. A FICO score like this won’t prevent a mortgage lender from approving your mortgage these days, however once you get down around 500 and below most lenders will not provide you with a mortgage.

The thing is, even though you will get approved for a mortgage with bad credit, you’ll find that the mortgage lenders will also take advantage of your poor credit score in the form of increased interest rates. Of course, for the lender this means more profits, but chances are if you’re already in a bad credit situation you’re probably also in the worst position to get hit with high interest rates. To compound the problem, mortgage lenders will require a down payment of at least 20% before approving a bad credit mortgage. Although it may be difficult for you to come up with this down payment, this is actually a blessing in disguise at it will lower your loan amount and your monthly payments.

These days as new laws are being passed and the mortgage credit market is reeling there has been a blurring of the lines between those with good credit and those with bad credit. Mortgage lenders are approving more people than ever, regardless of credit scores and with the new economic term “non-status” to describe those such as the self employed who cannot prove accountability, many who once would have been considered bad credit borrowers are no longer included under that umbrella. If you can find a way to include yourself in the “non-status” group your interest rate will be virtually the same as a person with good credit.

You’ll find bad credit mortgage lenders advertising all over the place these days and they are especially apparent on the internet. In just a few minutes time you can fill out a simple online application and find out if you can get approved for a mortgage. These companies are increasing their business dramatically thanks to the ease of the internet.

If you do have bad credit, take advantage of the internet and the ease with which you can get quotes and compare loan terms and rates. Be careful of companies who will try to make you fearful that you can’t get a loan anywhere but through them. This psychological blackmail is unfair to you and is simply not true. This type of bad credit mortgage lender will put fear into you so they can trap you into a loan with a higher interest rate. It’s simple to avoid this by getting several quotes and comparing lending rates.