Jeff S, Home Buyer in Brighton Beach, Broo...

I have a bad credit score (around 600) but I have enough cash for a 20% down payment on the properties I like and I make enough $ to afford payments.

Asked by Jeff S, Brighton Beach, Brooklyn, NY Thu Nov 3, 2011

What route should I take to get approval?

Help the community by answering this question:


Dear Jeff,

I'm seeing here on Trulia in the Q&A section a repeat of what I saw during the BOOM: consumers AND professionals trying to SHORTCUT their way to homeownership success. Have these people not learned anything from those terrible toxic mortgage loans?

If your credit is bad you should not borrow money to buy a home. Get your financial house in order before you ask a lender for a mortgage. This idea of "who does mortgages for scores below 620?" (or for that matter, taking out a high rate, or interest-only loan with the hope of refinancing later...) is the SAME IDEA that got us into this mess in the first place: lending to people who are not qualified to repay the loan.

Take your time to put your finances in order. Learn what a responsible HomeBuyer needs to qualify for and pay for a mortgage loan. Then work on those things---Income, Assets, and Credit---so you can make your dream come true the RIGHT WAY.

Good luck!
Trevor Curran
NMLS #40140
1 vote Thank Flag Link Thu Jul 19, 2012
If your score is only 600, you have some credit issues. Make an appointment with Neighborhood Housing Services for credit counseling. The counselor will go over your credit report with you. They will suggest you pay off any collections or judgments you have. Do it. It may take several months but your score goes up and you definitely will not get a mortgage if you have any open judgments. With collection accounts the underwriter often sees it as an unwillingness to pay your bills, so why would they approve a mortgage. If you bring your percentage of credit used down (from credit available) you also gain FICO points.
1 vote Thank Flag Link Sat Nov 5, 2011
You might want to consider buying something with creative financing. That way you could buy now, work on improving your credit, and refinance into a lower rate later.
1 vote Thank Flag Link Thu Nov 3, 2011
I work with a lot of people who have less than perfect credit. I tell all my clients that need a pre approval to visit The Lenders Network, I have seen loan approvals from them even with scores under a 600. So if anyone can get you a loan they can.

Good luck to you!
0 votes Thank Flag Link Wed Jul 31, 2013
Hello Jeff - I can get you a mortgage with a score of 580. The downpayment you have is great. If you still are looking for a mortgage contact me anytime. 914-299-0420
0 votes Thank Flag Link Wed Aug 29, 2012
Seek out an expert that would show you have to improve your credit score.
0 votes Thank Flag Link Thu Jul 19, 2012
You know some of us have bad credit scores due to divorce and what steps our ex's took after the divorce that we had no control over. I am in a situation that my credit score is 625 and none of the bad marks on my score are from anything that I did. So, to suggest that we get our financial ducks in a row, or to assume that we are unable to handle a mortgage just because of our bad credit score is a poor assumption and poor advice.
0 votes Thank Flag Link Thu Jul 19, 2012
The assumption is based on low credit score. Credit Scores are a risk assessment device. Lenders rely on credit scores to make an assessment on a Borrower's ability to repay a mortgage loan (or any other debt obligation for that matter). Been there with the divorce trashing the credit, personally speaking, and I've been reading credit reports for nearly 23 years as a mortgage professional. I stand by my advice based on personal and professional experience. If your score is 625, you're not too far off most Lenders' qualifying minimum score of 640. To go from 625 to 680 should not be too difficult. The secret to raising a credit score is this: 3 to 5 accounts open and active for at least 2 years with good payment histories; never owe more than 50% of available limit on revolving accounts (30% is ideal); pay on time; don't close accounts; don't take any action on derogatory accounts unless you have to (recent activity lowers scores). Trevor Curran NMLS #40140
Flag Thu Jul 19, 2012
Dear Jeff S:

You need to speak to a mortgage banker and get yourself pre-qualified. There is no cost or obligation for such a service and you can have it done in minutes at just about any bank. The bank will want to see your last two years tax returns, last three months bank statements and they will also look at your credit report and debt. Then they will tell you if you can get a mortgage and how much you can borrow. They will also tell you how much the loan would cost each month and how much your closing costs will be. Then you will know what your in for and can shop for a home with confidence.

So get yourself pre-qualified and the rest will fall into place. Hopefully you will be able to get the loan. If I can be of further assistance, please let me know. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
0 votes Thank Flag Link Fri Nov 4, 2011
6's is not bad. Just get in touch a mortgage professional, get a pre-approval so you know what you can spend & work on improving your credit...
You have options. Let me know when your ready!


Jack Menashe
0 votes Thank Flag Link Fri Nov 4, 2011
Why not use the money to pay down or pay off debt?
0 votes Thank Flag Link Fri Nov 4, 2011
There are other factors besides credit that determine qualification, therefore visit with any licensed loan officer(s), after reviewing your overall financials, a determination on the type of loan that best suits your needs can be made; at the same time, if you don't yet qualify, great suggestions may offered as to what needs to be done in order to be able to purchase in the near future. Be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously...
0 votes Thank Flag Link Fri Nov 4, 2011
If you can get up your credit score to 620 you may qualify for FHA., or even get a conventional loan. But a conventional loan may carry a higher rate.
Web Reference:
0 votes Thank Flag Link Fri Nov 4, 2011
You may qualify for an FHA loan. This is a government insured loan and you would have to pay mortgage insurance. Please feel free to call me if you want more information.
0 votes Thank Flag Link Fri Nov 4, 2011
Based on the information you provide, you may qualify for an FHA loan. Talk to a local mortgage broker who offers FHA. Many will consider approvals with even lower scores if the rest of the deal makes sense.
0 votes Thank Flag Link Thu Nov 3, 2011
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