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Trulia Brook…, Other/Just Looking in Brooklyn, NY

What options does a homebuyer with a good income but bad credit have?

Asked by Trulia Brooklyn, Brooklyn, NY Fri May 3, 2013

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Good evening,

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

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
1 vote Thank Flag Link Fri May 3, 2013
It depends on how low the credit scores are and the reasons why they are low. It must be looked at on a case by case basis. Your income will dictate HOW MUCH you can borrow while your credit will dictate if the bank is willing to give you the loan at all.

There are some private lenders who will give mortgages to people with bad credit, but the purchaser would have to come in with a huge down payment (35% or more) and also the interest rate attached to the loan will be very, very high. Because of this most consumers in this situation decide not to purchase and wait until their credit improves.

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
1 vote Thank Flag Link Fri May 3, 2013
Work on repairing or building your credit while saving a down payment over the next couple of years, get a co-signor, or look for a home that can be owner financed.
0 votes Thank Flag Link Fri May 3, 2013
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