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.
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.
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.
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Yes there are programs that do credit scores down to 605 but the interest rates are a little higher (maybe 1%). However, moving a 605 score to a 620 score should not be that difficult. What happened to the mortgage after you left him and got divorced? was the house foreclosed on. Is it still in your name. The biggest mistake people in a divorce make is not identifying all of the liabilities and identifying who is responsible. I currently have a client who is two years after divorce and just trying to remove his name from title but he incurred a judgment which he doesn't have the money to pay. This is now causing a problem separating the asset. The divorce says he is responsible but if he doesn't have the money she will have to pay it if she wants to remove him from title. So ensuring that you have been removed from the names of all his creditors and making sure he does not continue to affect your credit is imperative. The score may not be a problem but the mortgage history may be.
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010 & 2012
NMLS ID 143960
The better your score the better rates and terms you will get.
Some lenders may say they can approve you with your current score, but beware the interest rates as well as fees may be on the high side.
A score closer to 640 would be more beneficial to you.
Best of Luc to you!!!!!
Kawain Payne, Realtor
Applicants who have a minimum decision credit score of less than 500 are not eligible for FHA mortgages. Those with credit scores of 500 or better are eligible for 100% FHA loan financing with no down payment required when using the FHA 203(h), Mortgage Insurance for Disaster Victims.
You should call at least 3 local lenders and ask for help.