Financing in 35150>Question Details

Jerry, Renter in Wellington, KS

how can i get a loan with bad credit and a 500 score?

Asked by Jerry, Wellington, KS Thu Jul 19, 2012

My family and i live in my parents house and have had some medical issues for the past 5 years, my parents want us to buy the property or move out...im not having any luck getting a loan or getting the credit going in the right direction...can anyone help...please email me at jdcemc@yahoo.com....Thanks

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Trevor Curran’s answer
Good afternoon Jerry,

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

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0 votes Thank Flag Link Mon May 13, 2013
If you have some money to put as a down payment you should consider getting a hard money lender that will loan you the money for a higher interest rate.
You can definitely have a chance to get a house through a hard money lender.
Web Reference: http://hardmoneyloans.org
0 votes Thank Flag Link Sat Sep 29, 2012
With a 500 credit score, you are at least 80-140 below industry minimum credit scores. Working on paying off your outstanding collection accounts should be your very first step.
0 votes Thank Flag Link Thu Jul 19, 2012
With a 500 credit score, you're only likely to get a loan from a non-traditional private lending source. Their rates run between 15-30% a year.

If you're living in your parents house, why don't you ask your parents to finance your purchase of their house? That may be the best chance you'll have to qualify for any loan, since they already know you better than anyone else. You may still have to offer them a good rate between 8-12% for their loan.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Thu Jul 19, 2012
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