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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The only way to find out accurately and precisely the programs for which you will qualify is to speak with an experienced lender.
If you do not have a lender to assist you, your real estate agent should be able to provide you with several referrals.
If you do not yet have a real estate agent assisting you with your search, please feel free to contact us at 312.242.1000 as we would be happy to help you find a lender!
If you would like me to refer you to a loan officer at Well's Fargo, please give me a call at 708-922-4130.
Coldwell Banker Residential
An Affiliate that we use for referrals has sent me an email recently saying that some FHA financing can go down as low as a 530 credit score. If you would like to contact me directly, I can give you their telephone number so that you might get in touch with them to get the details.
Yes, there are loan programs for the scenario that you described. However, in order to provide the most accurate information, you will need to provide a Home Mortgage Consultant with more specific details, (amount of income, rental history, asset statement, etc..). Please call or email me to discuss the process further. There is no charge for a pre-approval. Thank you.