Credit Score in Houston>Question Details

startingnew9, Home Buyer in Pearland, TX

I would like to start the process of buying my first home, starting first with tackling my credit score of 562.

Asked by startingnew9, Pearland, TX Sat Jun 15, 2013

Are there loans available for scores this low? I have several old collection and charge off accounts which is causing my score to remain low, but they only total about 2500. Should I try to have these removed first or should I try to pay them off?

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Trevor Curran’s answer
Good afternoon startingnew9,

We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.

It is unlikely you could be approved for mortgage financing with that credit score at this time.

Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.
http://www.consumer-action.org/

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.
http://www.consumer.ftc.gov/articles/0058-credit-repair-how-…

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
1 vote Thank Flag Link Mon Jun 17, 2013
First off where did you get your 562 score? Online or from a mortgage company, the scores online are not accurate at all and will differ from the scores in a mortgage credit report in some cases quite drastically. Secondly your scores are not being held down by collections that are many years old, the older a collection becomes the less relevant it is in regards to your scores. Paying off collections that are this old is no way to get your scores up because it will still show as a collection account just that its been paid instead of having a balance. Regardless of what you may have been told your scores will not increase by paying these off, a collection is a collection regardless of disposition in the algorithm used by Fair Issac. Email me or visit our website if you want to speak to someone that knows credit and can give you some guidance on what to do.
1 vote Thank Flag Link Tue Aug 20, 2013
"Should I try to have these removed..." How??? most of the negative stuff will remain for 7 years.

what is your recent history like?? it's very important you stay current with all your payments.

review your credit report; make sure you correct any errors. get each of your credit card balances under 30% of their approved limit. Oh! did I mention, never be late with any of your payments.

it doesn't seem like you're ready for your first home yet.

good luck
0 votes Thank Flag Link Sat Jun 15, 2013
There are all kinds ways to try to fix credit scores easily (they say) over the Internet. I hear commercials on the radio and see them on TV. You can try them and likely spend some money. Do this OR...the true way is to simply take care of your debts and work with a good lender that will advise you on the steps to improve your credit scores.

If your scores are low, this means your not financially ready. You need to be financially educated on how this "buying a home" works and how it will effect you and your money now and down the road. Buying a home is part of a larger picture of your financial independence and the start to you building some wealth. Get with a lender that will help you. I have a link here to some great lenders that work with first time buyers and can advise you on how to fix these credit score issues. http://www.markknowshouston.com/res_list.php?cat=12282&c…

Mark McNitt
m 832-567-4357
Bernstein Realty, Inc.
0 votes Thank Flag Link Sat Jun 15, 2013
I would talk with a lender first. They can generally help you with credit repair or can refer you to someone who can help you. You will need to get your credit score up about 100 points. If you need some direction, you can email me at rof45@tmail.com and I can help get you pointed in the right direction.
0 votes Thank Flag Link Sat Jun 15, 2013
You are starting out with the right idea. Get your credit situation improved by checking with several credit repair companies that can help you by explaining the things that you can do for yourself and then the things that they will do for you, for a fee. Don't do anything without the advice of your representative from the credit repair company. You might make things worse. Make sure that to find one that will not charge you for the initial consultation and find out what they will be doing for you and what the continuing, monthly, charges will be. There are many companies to choose from and the following is a list of credit repair companies that some of my clients have used and are satisfied with (these are not in any particular order):

Improve My Credit
Tranquility Credit Repair
Credit Recovery Group
Caravan Credit Services
Lexington Law
Credit Repair.com
Sky Blue Credit Repair
Ovation

Check them out through their web sites.
Get a timeline on getting your credit scores up to at least 620, or better (680), and get a preapproval from a home mortgage lender.
Once you have your preapproval, get in touch with a REALTOR(r) to find homes that meet your requirements and price range.
0 votes Thank Flag Link Sat Jun 15, 2013
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