Credit Score in Illinois>Question Details

Michelle, Home Buyer in Illinois

I have a credit score of 575 and my fiance has a credit score of 725. We want to buy a house together but I'm

Asked by Michelle, Illinois Mon Feb 2, 2009

afraid my credit score will affect our interest rate and payments. How much will my credit score affect our house buying opportunities? Any insightful information would be helpful!

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Michelle: Your credit score is low, but not so terribly lower than the 620 score needed to include you on a mortgage loan. Depending on the debt you have causing the lower score, your score might be fairly easily raised. That being said, until seeing your actual report, it would be hard to make that call. I guess what I'm trying to tell you is this ... don't give up hope of being on a loan with your fiance. Possibilities and options may exist to address the problems you face. Many lenders, including myself, have assistance programs and suggestions that can help you improve your scores on a timely basis.
If you'd like more info regarding what options might exist for you, please let me know ... either here or via my website.
Best of luck to you, no matter your decision ... and in your upcoming wedding ...
Web Reference:
0 votes Thank Flag Link Wed Apr 18, 2012
Hi Michelle,

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
0 votes Thank Flag Link Wed Apr 18, 2012
Well, if you are looking at conventional financing you wouldn't be able to go on the loan. All borrowers need to be 620 or higher so your husband would have to qualify on his income alone.

FHA is probably your best bet at getting approved if you need both of your incomes to qualify. The rates are comparable to conventional loans, and FHA loans do not have a minimum credit score requirement.

That's not to say they do not have credit standards though. On an FHA loan, an underwriter is more concerned with "why" your credit score is 575. If you are just not good at paying your bills and have defaulted on a lot of credit or filed for bankruptcy, then you probably need to demostrate at least a 12-24 month current history of on time payments to get approved. If the reason for your scores being that low is due to a temporary setback such as job layoff or something then you may get some sympathy provided you've had a good history otherwise.

A couple other things about FHA: the property you are buying is nearly as important as your qualifications for the loan. All homes must meet minimum FHA property requirements, meaning a property such as a foreclosed "fixer upper" might not qualify for an FHA loan. Neither will some condos out there.

The best advice I can give you is to speak to a local, reputable lender and work with them to find out what your options are

Good luck
0 votes Thank Flag Link Mon Feb 2, 2009
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