I put together lease-options (among other things), and that often involves working with people with "bruised" credit. One of the most valuable "partners" to anyone doing lease-options is a good mortgage broker who will work with a prospective buyer to help improve their credit scores. And that clearly works well for all parties involved: It helps the potential buyer actually qualify for a loan. It helps the mortgage broker, who may make the loan. And it helps the investor, who will make more of a profit if the tenant-buyer actually purchases.
And, of course, that same benefit is there even when you're not doing lease-options. In "conventional" purchases, just substitute "Realtor" for "investor" in the scenario above.
So if you've run into a lender or broker who just shrugs and says your scores aren't high enough--come back when they're higher--you may want to look for someone else who can provide the guidance you need on how to get your scores up.
Hope that helps.
Marcia Kelly, CRS
Keller Williams, Legacy Partners, Inc.
2945 SW Wanamaker Drive, Topeka, KS
There is one really, really important thing about rescores: They are temporary. It helps with that one credit report in the pursuit of that one loan. Assume you have an inaccurate item. That inaccurate item is excluded, they re-run the FICO model and, voila, loan approved.
Your credit file; however, has not changed. So, when GEICO goes to renew your auto insurance, you still pay more than you would if they thought you had good credit, etc.
I just recently problem solved this exact situation. I have a credit councelor here in Kansas City that has helped many of our clients raise thier credit score. If you aren't interested in that, please email me directly and I'll tell you some other ways to fix your credit. AND, finally, I have a lender that pulled credit (last week) noticed about 4 ways that my clients could improve thier score right away - my clients did a few of those recommendations and then the lender did a rapid rescore! Let me know how I can help!
Why wouldn't 620 be high enough? You should have a preliminary approval from whomever you speak with relatively quickly.
Be careful. Some originators will tell you that the score being below X means you need to pay extra fees, etc. Total rubbish. You should not origination fees over $1000, you should not be told that you have to pay points.
Even if the loan doesn't require a higher score, yes, a good originator will be talking about credit planning if they care about your long-term finances. Higher FICOs save you money on auto/home insurance, auto loans, and credit cards.
Some lenders will and many wont.
Generally you want to keep your number of credit lines open to less than 5, i.e. credit cards.
You want to keep your CC balances to only 30% of the card limit.
Prudent to pay, your balance say 2-3 times online, on different days before the due date or send in
2-3 payments per credit card on different days before due date.
Also you want to limit your number of credit checks on your Soc. Sec. number.
Call the Credit Bureaus, and have them restrict access to Credit Card companies trying to
send you new cards.
Negotiate your late payments or pay them off.
Set up a secured loan and pay it down, over 6 months to a year.