YES, it will. Sorry to be blunt about it but bad credit can really break your dream of owning a home. Or if it does not, it will make the process very painful. How painful? Well, is 20-23% loan interest painful enough for you? Don’t believe me? Go and watch the How I Met Your Mother episode where Marshall and Lily were trying to get a loan to finance their dream house (or so they thought) in Dowisetrepla (and if you want to know what that means, you really better should watch the series!). Because of Lily’s spending problems, they had to take a loan at these very high rates eventhough her husband Marshall was of such impeccable financial standing.
The thing is, bad credit is always correlated to irresponsibility and inability to control one’s finances. Though this is a rather hasty generalization, creditors will want to remain on the safe side rather than risk believing a stranger with bad credit history to suddenly do good on his long-term promise.
When getting a home loan, while it is true that it is the bank or the creditor who gains profit from the transaction, the burden of proof is with the applicant, in this case, you. It is your burden to prove that you are a trustworthy, reliable, and, most of all, controlled person who will deliver his promises (read payments and mortgages) on the time he said he would.
Sad, but so cold true. So you should really strive at all times to keep your credit history in spanking shape. With credit report and credit history, your past will literally haunt you for the rest of your life!