Home Buying in 95826>Question Details

natalieybarr…, Other/Just Looking in Sacramento, CA

My credit score is 597. I have never had a credit card, I'm not fond of banks. What would I have to do to get a home loan?

Asked by natalieybarra2290, Sacramento, CA Tue Jul 9, 2013

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Credit unions may be more acceptable to you than 'banks'. You'll need to get credit cards in order to establish credit. It could be at a local store you like to shop at as well, gas card, discover card, maybe an American Express card that gives you discounts at Costco. There are some benefits to having them but you don't need to use them but once a year to keep them active. They normally like to see three lines of credit and for you to keep the balance under 30% so if you use them once a year, then pay off the balance, you will see your score raise quickly.

Without them, even if you find a lender that will work with you, you will pay more to obtain a mortgage than if you can get your score a little higher.

good luck.
1 vote Thank Flag Link Tue Jul 9, 2013
The Lenders Network or Lendingtree? But I have heard bad things about Lendingtree.. I know The Lenders Network specializes in helping people with poor credit and have many of the lenders that require a 580 credit score.
3 votes Thank Flag Link Fri Jan 31, 2014
Good evening natalieybarra2290,

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.

Trevor Curran
NMLS #40140

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1 vote Thank Flag Link Wed Jul 10, 2013
There are many components to credit qualifiers fico scores being one of them you would probably benefit from some minor credit repair and get up to a 620+ that would make you a much stronger buyer in today's competitive market place.
If you would like to discuss this in a more private forum you can send a direct message here on Trulia or to eddie@bhrparkplace.com
1 vote Thank Flag Link Tue Jul 9, 2013
You may be cheered to hear of the return of sub prime mortgage lending. Maybe you shouldn't be.
Sub-prime mortgage loan defaults were a contributing cause, possibly the leading cause, of the global financial crisis of 2008,
It will no longer be called sub-prime. The new name is High Risk Consumer Lending. What that means is you will pay a higher rate than someone with good credit because it is perceived that your awful credit score means that, considering your recent credit history, you are more likely to not pay your mortgage loan.
Because the investors that fund these loans expect some losses, they demand higher rates of return to compensate them for their extra risk.

My advice is don't do it. Don't buy. Rent. Get your finances in order over the next few years so that you can get the benchmark rate.
1 vote Thank Flag Link Tue Jul 9, 2013
Jim Walker, Real Estate Pro in Carmichael, CA
Hello Natalie

I would definitely speak with a lender so they can actually get you on the right track to get pre-qualified for a loan. I have a lender who is able to look at your credit and help you bring it up. If you need a referral let me know. Also if you aren't already working with an agent and are looking for one, I do specialize in the 95826 area and would be glad to help in anyway I can.

Jaime Becker
Lyon Real Estate
Off: 916-484-3610
Cell: 916-715-7454
BRE# 01737783
1 vote Thank Flag Link Tue Jul 9, 2013
Most lenders nationally will want you to have a FICO of 620 or higher. While there are programs available that go down to 580.

Another suggestion you may want to look into is a credit union or portfolio lender where they essentially make their own credit guidelines.

Otherwise, I would get a few credit cards with low limits and just use them for everyday needs and pay them off at the end of each month. Doing this over time will help you build credit and increase your scores.

Hope this helps!
1 vote Thank Flag Link Tue Jul 9, 2013
Open up at least 3 lines of credit(could include previous car payments, student loans etc). But in order to get credit one must show the ability to successfully borrow.
1 vote Thank Flag Link Tue Jul 9, 2013
You need to build your credit somehow. That usually means credit cards!
1 vote Thank Flag Link Tue Jul 9, 2013
You may have a Credit Score, but your probably do not have enough credit reporting for the Lender to hang their hat on:
They need to see a long term track record of paying your bills.
And 597 is not good.
1 vote Thank Flag Link Tue Jul 9, 2013
Hello Natalie, your fico scores can be raised within 3-4 days in most cases to qualify for programs, rates and terms as necessary. You can do the whole loan process from the comfort of your home if you would like...

You may qualify to buy FHA with fico scores between 500-579 with 10% down or minimum 580 fico score may qualify FHA 3.5% down or as low as .5% half percent down payment program. You may consider 3% down conventional from a minimum 620 fico score.

You will need to be pre-approved if you decide to buy to be able to meet an agent to view and submit offers on any homes of your choice. Your qualifications will be determined by your credit profile, debt to income ratios, fico scores, home price, loan program and how much you want to invest into the down payment and closing costs.

If you figure out what cities/zip codes you are considering, minimum number of bedrooms and the maximum payment/price you are looking to achieve you can be emailed listings to fit your search criteria. Your email address is needed to set you up for the automatic daily updates.

You may qualify to buy with minimum out of pocket expenses and pay less than rent in many cities. It only takes a few dozen questions to qualify, go over your options and email you listings to study and compare. Here are some links to study as well as web reference links to many loan program pages offered...

Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
Veteran & VA/CalVet Loan Specialist
REO & Short Sale Specialist
Credit Repair At No Cost
ALL Loan Programs Available
22+ Years Experience
BRE# 01140252
NMLS# 297251
9am till 5pm by phone Monday thru Saturday, Sundays by appt., EMAIL ANYTIME 24/7
Under640FicoScoreLoans@gmail.com or HomeLoans4U@live.com

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0 votes Thank Flag Link Wed Apr 29, 2015
Well Cash Is King, is not always a true statement. Almost always but for you, the fact that you are reluctant to get a credit card and pay cash for everything is now coming back at this Crowning moment. Go online and find a credit card that is willing to work with you.. most are if you have a job. Start using it and pay if off each month,, you pretty much need to do this soon.. the key with credit cards.. other than the great fortune of having one if you need to purchase a something as part of a life event/ emergency.. or even to rent a car. anyways the goal there is never exceed 50% of the amount they allot you,, over time they will want your business even more so ask Both for an interest percentage reduction and also up you limits. Now you shine in that part. As for Banks, 70 % of the population is not fond of banks, yet we need them and use them,,part of the home ownership concept, you do things because you have to. Credit Unions are far more personal and typically non profit so they have advantages to some of your unfondness.. You can of course find other ways to grab a loan but why pay more than you should,, its expensive enough with all the right steps in place. Talk to a loan specialist . perhaps outside of the big box bank.. and set up a plan. no better time than NOW. Good luck..
0 votes Thank Flag Link Wed Apr 29, 2015
Ideally, when applying for a home loan you would have a great credit score (>710), at least two lines of credit (credit cards) that have been in good standing for at least two years, and also one prior/current loan in good standing like a car loan. This circumstance shows the mortgage lender that you have a. Also, you'd want to have a low debt to income ratio with your current debts before bringing on additional home loan debt.

But it looks like you are trying to find an alternative manner to establish your credit without going through a traditional banking institution. The best alternative is to start with a credit card from a local credit union to build your credit history over a two year period. Home lenders want you to have at least two lines of credit history, so as your second line of credit you could use one of the following to qualify: a car loan through a credit union in good standing, a cell phone contract in good standing, a contract gym membership in good standing, a history of good standing with your utility service provider, or a contract cable/internet service in good standing.

Keep in mind that you also need to be a recent college graduate and working in your field of study or you need to have a 2 years of work history working in the same industry over the two years. You can switch jobs as long as you remain in the same industry, and don't have large gaps in work history.
0 votes Thank Flag Link Sat Feb 1, 2014
I would temporarily suspend your home search. Pay off or pay down any debt that you have especially high interest debt such as credit card debt. Also work on repairing your credit score and continue to save for a down payment.

Jason Walter
Realtor, CPA
0 votes Thank Flag Link Thu Dec 26, 2013
A good idea would be to open a secured credit card account. Utilize it very little, carry a small balance and make on time payments each month. Revolving credit utilization accounts for roughly 1/3 of your scoring, so don't max the card out, or even get it close. There are a couple companies out there which will convert the card from a secured to unsecured after 1 year to 18 months. I believe bank of America is one of them that converts the account after 1 year. Another option is the CD secured loan. You deposit say, $1000 into a cd, take out a loan against it then pay it off. Not only have you established some credit, but you also have gained some interest on the $1000. It wont be much, but better than nothing. Get with someone who really knows credit, and figure out all the items which are driving your score down. Take care of them, do the things I suggested, and your scores will come up. I wouldn't recommend going out and trying to procure a home loan right now, until you have the rest of your credit in order. The additional debt will just make it more difficult to pay down or pay off the derogatory items which are currently affecting your score. Best of luck, and if you have more questions, feel free to just ask!
0 votes Thank Flag Link Thu Dec 26, 2013
We can certainly help you out. You can check us out at http://www.TheMortgageOutlet.com and give us a call. One of our loan officers will look at your situation and present you with some options
0 votes Thank Flag Link Thu Jul 11, 2013
I would like to tell you that i work with credit expert day to day and there is a few things that you can do without a credit card. Also getting a pre approval leter now with that credit score if you are not a veteran it will be usless. First things first. and there are also programs available that you dont need any down payment. if you have more questions pleas feel free to contact me.

Edwin Mieles
Senior Loan Officer

Residential Finance
1 Easton Oval Suite 400
Columbus, OH 43219
614.754.2754 Direct
614.324.4700 Ext 1561
877.224.7657 Fax
NMLS: 986881
Company NMLS ID: 1652
0 votes Thank Flag Link Wed Jul 10, 2013
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