Millions of people around the world have felt the pinch of the economic downturn. As unemployment rises, more and more people find themselves without a job. Many of those people find also their financial health quickly deteriorating.

This economic cycle has played out many times throughout our history. Unfortunately, the economy often improves faster than the damage that it did to the average family. Maybe you are one of those who has fallen victim to unfortunate economic conditions in the past but now you have began the rebuilding process and with that comes a new job in a new community.

With a new job often comes relocation and with relocation comes a new problem: You need a mortgage but have damaged credit. The good news is that the bad news may not be as bad as you think.

What’s Your Credit Score?

These days, anything less than a 680 credit score is going to cause you trouble getting a home loan. While it’s more difficult to get a home loan, it’s not impossible. There are a few strategies that you can employ to get the home.

First, you are going to have to face reality. Before shopping for your home, understand that until your credit improves, you will probably have to settle for a smaller home than you would like. You’re going to have to shop for bargains.

Remember that if you have damaged credit but your new job has left you in a healthy financial situation, buy a home that needs some work and slowly improve it. You don’t need good credit to install new carpet or paint the fence.

Get Prequalified

While it is a good idea for everybody to get prequalified for a home loan, it is even more important that those with damaged credit to get prequalified. You need to know what your credit limit will be before you go shopping.

Remember that the more money you can put down, the more receptive the lender will be to you. If you sold your home and saved that money, it would be ideal if you could put 30% down on your new home. For many, that will not be possible but keep in mind that many lenders are asking for much larger down payments than in years past.

While it’s always a good idea to pay off your credit cards, if you know you are going to be moving in to a new home, save the proceeds from the sale of your home as a down payment for your new home. Don’t use it to pay off your credit card. This is one of the few exceptions to always paying off debt as soon as possible.

Other Options

In the event that you cannot qualify for a home loan, all is not lost. Ask your lender if you qualify with a cosigner. If you still do not qualify, maybe you have a family member or friend who invests in real estate who could take out the loan and you could either rent from them or negotiate a deal where you can pay in to the equity of the home.

Regardless of your home, you want to keep your focus on rebuilding your credit. That may require you to rent a home for a period of time. Be patient and don’t try to live beyond your current financial status. You’ll get back on your feet in no time.

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