Earlier, having bad credit was the greatest detriment to getting a mortgage approved. However, today there are a vast number of companies who specialize in providing mortgages to people with bad credit. Even a large number of mainstream companies (read: highly reputable companies) are joining the fray. Mortgages to people with a bad credit history are today considered to be big business.

Bad credit mortgage companies, also called sub-prime mortgage companies, rely on FICO scores to determine the creditworthiness of a person. These scores are available with agencies such as Equifax, Experian and Trans Union Corporation. A FICO credit score of less than 620 is generally considered bad credit. Though mortgage companies today do not shirk from giving loans to bad credit people, they do not typically provide any mortgages to people below FICO scores of 500.

The bad news is that many mortgage companies do not hesitate in taking advantage of the precarious situation their bad credit history clients are in. This is shown by the way they charge higher rates of interest than people with good credit. This means more business in the bad credit mortgage market. In addition, people with bad credit need to make a down payment (typically at least 20%) to prove their earnestness to the purpose of taking the mortgage. This is good to the borrowers, as it makes repayment easier. Bad credit borrowers are also obliged to pay mortgage insurance