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.
Sr. Mortgage Banker
NMLS # 659743
While I agree with most of the responses below, having a mortgage and paying it on time will significantly help your credit. Different types of credit are good to have. There are some lenders that will go below 600 middle score. If either of you are veterans, a VA loan will go down to 580. Whether this is a good time for you to purchase is going to be up to you. As with ANY loan you do, you want to make sure you know all the terms and conditions before you sign anything.
Can I ask why your credit is a little lower? Do you know why?
I have read that "To be exact, there is at least a 4% discrepancy between the interest rates given to individuals with a credit score of 760 and 580" here http://www.myfreecreditreportx.com/required-minimum-credit-s
If you have any other questions I am happy to email you back here or at firstname.lastname@example.org