To obtain a mortgage with a poor credit score, buyers should first focus on improving their creditworthiness through consistent debt repayment, reducing credit utilization, and resolving errors on credit reports. They should consider government-backed loans like FHA or VA mortgages, which typically require lower credit scores (e.g., 500–580 for FHA) and offer lenient terms. Additionally, seeking pre-approval from alternative lenders or community banks that specialize in riskier borrowers can increase approval chances. Securing a co-signer with strong credit may also help, though this transfers responsibility to another party.

Improving credit scores is critical because lenders use them to assess default risk. A higher score reduces interest rates and loan costs, as seen in data from the Consumer Financial Protection Bureau (2022), where borrowers with scores below 600 paid average rates 1.5–2 percentage points higher than those above 720. FHA loans, requiring a minimum 500 score, allow down payments as low as 3.5%, while VA loans (no credit score minimum) cater to military veterans. Research by the Federal Reserve (2023) found that 64% of lenders tightened credit requirements post-pandemic, making proactive score repair essential. For example, paying off 30% of credit card debt in six months can raise scores by 50–100 points, per FICO’s guidelines. Combining these steps with stable income documentation and manageable debt-to-income ratios maximizes mortgage approval odds despite poor credit.