Credit Score in Houston>Question Details

Christie Jan…, Home Buyer in Saginaw, MI

My credit score is a 530 something, can I get help to purchase a home with this type of credit score?

Asked by Christie January, Saginaw, MI Sat Feb 7, 2009

Help the community by answering this question:

Answers

11
Trevor Curran’s answer
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://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.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm


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
1 vote Thank Flag Link Sun Apr 29, 2012
Again, although most conventional lenders probably might pass over you, you might find a seller who's willing to sell his/her property to you using a lease-option. That's probably your best option, because you'll be able to do the following: 1) work with a credit counselor and the seller to help you to map out a strategy to improve your credit rating at least to raise your score to the seller's minimum limit, 2) establish a good payment history with the seller during the lease period, 3) build up your down payment over time (also during the lease period), 4) exercise your option to purchase the property, and 5) refinance (a year or 2 after having exercised your purchase option--if you desire) with a conventional lender.

Although there are sellers who are willing to work with you, you'll need to first make sure that you've either resolved or started working on the issue(s) that caused your credit score to decrease. Nevertheless, few (if any) will be willing to help if you haven't attempted to at least address that/those issue(s).
1 vote Thank Flag Link Mon Mar 23, 2009
Building upon Dunes' framework, and assuming you've already resolved the issue(s) that caused your credit to take a hit, then here are 2 more options: 1) work with a credit counselor help you to clean up your credit some more, and 2) purchase a home with seller financing (a lease-option is probably your best option).
1 vote Thank Flag Link Sat Feb 7, 2009
I have a lender that has a program for credit scores between 500-579
90% LTV (loan to value) so you need 10% down
6 months of mortgage payments in reserves
43% max debt to income ratio

And at least one of the following compensating factors
5 years on the job
Minimal payment chock 25% or less
DTI at least 5% below the maximum 43%
Current FHA mortgage paid as agreed for the last 24 months.

It's not a sure thing these types of loans could always fall through during the underwriting process and financially it is not always feasible. I can elvaulate your credit report and help you get your scores up to the 580 mark where I have lenders that can do an FHA loan with 3.5% down.
0 votes Thank Flag Link Wed Jul 3, 2013
Hi Christie,

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://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.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm


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
0 votes Thank Flag Link Wed Apr 18, 2012
do you have to post twice. She asked for help, not advice for how to improve credit score. I hate people like you. So self-f-ing righteous!
Flag Mon Jun 18, 2012
Christie,

You may have time to raise your credit score by beginning to implement critical changes necessary to do so but you must begin now.

Our recommendatio is to meet with a loan specialist and request their advice about getting the quickest results so you can take advantage of the current opportunities including home availability, low interest rates, and possible first time buyer incentives.

You have been provided with excellent advice from the Trulia Pros, we recommend that you begin with them ASAP.

Good luck
0 votes Thank Flag Link Mon Mar 23, 2009
Unfortunately the answer to this question is probably not, I am sorry to say.. but that doesnt mean it takes forever to change that

Improving your credit rating is very easy to do..just talkes a bit of time....best thing to do is make sure you are always on time with any payments on credt you may have outstanding and try to pay off balances as much as you can. Also look at your credit report to make sure it is accurate and it it isnt you need to contact the credit reporting agencies to correct it..

If you are not aware you can check your credit once a year with the three major agencies go to .. http://.www.annualcreditreport.com.........not freecreditreport.com..like the commerical that is basically just a site that is offering a monthly credit monitoring service for a montly fee
0 votes Thank Flag Link Sun Mar 22, 2009
I was working on rescoring a client's score and discovered the following useful information. The industry standard has been keep your credit card balances at or below 40% of the credit limit and you will improve or maintain a higher score.

Apparently, the bureaus have changed the rules and not bothered to tell the masses.

Now, if you have excellent credit, you should keep you balances at or below 40%. However, if you have derogatory information, collections or judgements (satisfied of course), then you should keep you credit card balances at or below 30%.

Something to consider as you work on improving your credit scores.

Sincerely,
Jacqueline Clarke
Down Payment Assistance Specialist/Loan Officer
Enterprise Mortgage Group
Winter Park, FL 32789

Direct: 407-739-3853
0 votes Thank Flag Link Mon Mar 16, 2009
I think the best thing to do is allow several months before applying for a mortgage. Sounds like you know where you stand credit wise at this time. Consider the following steps to improve your credit:

1. During that time do not apply for any new credit
2. Lower your overall debt to improve debt to available credit ratio
3. Inspect all 3 credit reports and dispute inaccurate data
4. Obtain a secured credit card to boost your credit score

I recently came across an excellent depository of credit related information. I added a link below, check it out.
0 votes Thank Flag Link Mon Mar 16, 2009
Unfortunately, you will be not able to get a loan with that score. Most lenders have raised the min. scores to 600-620. There are lenders that will do scores at 550 but those approvals are rare. Remember your score is only one component of mortgage application. We look at your employment history, rental history and assets - savings, down payment.

While you may be able to get seller financing, the interest rate will be higher than the market. And you may be locked in for a specific period of time. It is an option though. Be sure keep a record of your payments - copies of your cancelled checks and/or money orders. Do not pay in cash. Also ask him/her if they will report the payments to the credit bureau.

I also agree with Dune's suggestion. Contact a credit counseling organization to help you improve your score. Don't pay a company to perform this service. In my experience, I found that companies that charge for "credit repair" aren't any more effective than the non-profits. It usually takes about 60-90 days to see an improvement but it can take longer depending what has to be done.

Consumer Credit Counseling and Acorn are two national organizations that provide this service at no charge.

In the meantime, keep your credit card balances at 40-50% below your credit limit, make all payments on time and try to create some positive credit. Take out a secured installment loan with your bank or credit union and be sure to pay it on time. This should be short term and not more than you can afford - $500 is good. Make sure the bank reports the loan to the credit bureaus so it will reflect your on-time payments and thus build your credit score.

Good Luck,
Jacqueline Clarke
0 votes Thank Flag Link Sun Feb 8, 2009
Christie, The basic answer is or should be (IMHO) you need to see what you can do to raise your score. The truth is you have everything to gain by doing this as you take the time to learn about the market you are interested in.
We don't have any details or knowledge of why your score is low and it could be for many reasons. What's important is that you find out and do what is possible to raise it, making yourself eligible for more programs and loan opportunities. You can go here...https://www.annualcreditreport.com/cra/index.jsp ...to get a look at your credit report and see if there are things you can fix.
You might want to take a homebuyers course to get information, leads and contacts.
http://www.hud.gov/buying/localbuying.cfm
or counseling for credit repair info ect..
http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
Homebuying info
http://www.hud.gov/buying/index.cfm

This is the Gov. site for all Gov. loans... http://www.govloans.gov/govloans_en.portal?_nfpb=true&_p…
Check them out and see what you might be eligible for, stay on top of new programs which will be appearing.

You can use the Hud site to look at Hud properties for sale and this site for links to the Bank properties for sale sites (REO)... http://www.mortgagenewsdaily.com/wiki/REO_Database_List.asp

This is a Gov. site with mortgage info, calculators, tons of info..you should check it out.. http://www.ofheo.gov/PublicInformation.aspx?Nav=136
Keep track of the mortgage trends...http://mortgage-x.com/general/rate_trend.asp .......http://www.fhfa.gov/
Anyway, I suggest working on the credit score while you learn the market and prepare to find the best home possible.

Good luck, Dunes
0 votes Thank Flag Link Sat Feb 7, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer