Fair score home loan

Asked by agency_position, Opelika, AL Tue May 28, 2013

561 score from Equifax. No other debt than 30K in school loan, $226 a month. I am self employed and average about 7K a month. VA loan eligible as well. I want to buy home from my wife. Current loan in her name. 6.5 interest rate. She has been trying to get a modification for over 4 yrs. I had some defaults/charge offs about four to five years ago. Any help?

Help the community by answering this question:

+ web reference
Web reference:


Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Wed May 29, 2013
Good morning agency_position,

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

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
0 votes
John Davison, Agent, Cary, NC
Tue May 28, 2013
I am sorry that no one has taken the time to respond to you. While I am not a lender, I do work extremely close with my lender partners, so I can give you my two cents worth and direct you to someone who is far greater qualified to answer this question.

The 561 score is definitely going to hurt you. Most lenders are looking for a minimum score of 640. The DTI looks alright from what you are saying. The defaults and charge offs seem to be far enough in the past to not really affect you. Being self-employed, I think you will need a minimum of two years tax returns and might be opened up to greater scrutiny by underwriters.

Shoot me an email and I will forward your contact information on to one of my lender partners. I can be reached at johndavison01@gmail.com. Thanks.

John Davison
The J. Davison Realty Group
Coldwell Banker Advantage
2128 High House Road
Cary, NC 27519
(919) 449-7721
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more