605 Middle Mortgage Score - Need a mortgage in Michigan - Best Lenders?

[Anonymous]

I recently pulled my credit score, and although it has increased 40-60 points over the last year, the mortgage score hasn't risen quite as fast. I applied today with Quicken Loans for a pre-approval and was turned down due to my middle score being 605. My mortgage scores are (599, 605, 630). I am interested in an FHA loan, with a loan of no more than $250,000. I have the income to support this, and the down payment, but not sure if it's possible due to the 605. Considering the pace it takes for the mortgage score to increase, it could be another 3-4 years before that score goes above 620! I understand that 580 is the new requirement, I just havent seen a lender that actually will finance below a 620. I have used the "credit repair" companies (Lexington Law, Blue Sky, etc) and they help minimally - not seeing much improvement since starting with them. 

Any suggestions on lenders in Michigan that would be able to help? I'm interested in purchasing now, for a move in the summer, if this is possible. Any suggestions or guidance would be helpful! 

[DallasLoanGuy]

do you have a realtor yet? can they refer you?

or just start calling

[Anonymous]

We are in the same boat score wise and our mortgage loan officer said we just need 580. He's licensed in multiple states and is not based where we live. Go to a thread titled best online mortgage lenders. 

[Anonymous]

Depending on what's on your credit report, you may be able to raise your mortgage scores quite easily. Look at my sig and you can see how mines have grown in just two months. 

I agree with last poster, some lenders have overlays that they require above what the standard is. Some lenders can go down to 580 for FHA, and others want 620. Our lender takes 580 for FHA and 620 for Conventional loans. 

[Anonymous]

What are the things that quickly raise your mortgage scores?  I am currently in waiting mode, partly due to having my student loans in default (last payment next week woot!) and partly due to my scores being too low.  I have cleaned up all buy my medical collections and have paid down 2/3 credit cards to a 0 balance and will be payind the third down to under 10% next week as well.  I have my eye on a house that I would like to see, but don't want to fall in love with it if a mortgage approval is not in my near future.  

[Anonymous]

Not true.  I recently raised my mtg scores 25 pts in 2.5 months.  It takes work but it can be done.

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@Anonymous wrote:

I recently pulled my credit score, and although it has increased 40-60 points over the last year, the mortgage score hasn't risen quite as fast. I applied today with Quicken Loans for a pre-approval and was turned down due to my middle score being 605. My mortgage scores are (599, 605, 630). I am interested in an FHA loan, with a loan of no more than $250,000. I have the income to support this, and the down payment, but not sure if it's possible due to the 605. Considering the pace it takes for the mortgage score to increase, it could be another 3-4 years before that score goes above 620! I understand that 580 is the new requirement, I just havent seen a lender that actually will finance below a 620. I have used the "credit repair" companies (Lexington Law, Blue Sky, etc) and they help minimally - not seeing much improvement since starting with them. 

Any suggestions on lenders in Michigan that would be able to help? I'm interested in purchasing now, for a move in the summer, if this is possible. Any suggestions or guidance would be helpful! 

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[Anonymous]

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@Anonymous wrote:

What are the things that quickly raise your mortgage scores?  I am currently in waiting mode, partly due to having my student loans in default (last payment next week woot!) and partly due to my scores being too low.  I have cleaned up all buy my medical collections and have paid down 2/3 credit cards to a 0 balance and will be payind the third down to under 10% next week as well.  I have my eye on a house that I would like to see, but don't want to fall in love with it if a mortgage approval is not in my near future.  

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Once that student loan is out of default, you may see an increase ranging from 15-30 points depending on what else is on your report and how the defaulted loans are updated on your reports. If the loans are federal, sometimes when you resolve a default through a payment plan, the tradeline and it's history is deleted from your report. Other times it will update to just a paid status and any negative history will remain. There's no way to know which will happen until it hits your report. 

In regards to your credit cards, the best scoring scenario for revolving debt is to have all cards report at zero except one. The one that reports a balance should be 9% and under of your limit. So if your credit card has a $2,000 limit, the max number that should be reporting is $180. 

Do you have any other debts besides your student loans and credit cards? You should really speak with a lender. Our lender told me to not even touch my medical collections as they are ignored with FHA loans. Of course that is if you are going that route. Your situation may be different, but an experienced lender can look at your credit report and tell you what can be done to get you financed. It may also help to not try a big-box bank as their overlays may be very conservative. 

[Anonymous]

The student loans are federal loans.  From what I have read, I am expecting new tradelines to appear once they have been transferred to a new loan servicer with perfect payment history dating back to the origination of the loan, which for some of my loans is 10 years ago.  I am hoping this gives me a huge (at least bigger than the 15-30 points you are thinking) jump since I have 13 loans.  

That is the exact plan I am going with on the credit cards, 2 are currently reporting with a $0 balance and the other one will be under 9% next week.  

I do have a few other things that I am paying on, but they total under $2,000 which is what I was told is the max for collections.  I had a civil judgement against me that I have recently paid off and am waiting to be removed from my credit report.  I was told I just need to submit the Satisfaction of Judgement and $5 to the Clerk of Courts and it will be removed (not just updated as paid).  The broker I met with in February sent me to a credit repair person who told me what to do (exactly what I was already doing) and said that I should be good to go by June or July at the latest.  Right now the big thing is just waiting for the student loans to report with the new information after I make my last payment and at that point I will be reaching out to a mortgage broker again since I know they can't do anything for me in the mean time and I don't want any unneccesary credit pulls.  

[Anonymous]

I also had defaulted Perkins loans with the federal government for my student loans. I applied for consolidation(didn't do the payment route), back in February 2017. The funds from the consolidation disbursed on April 10, and my old servicer, Great Lakes reported a $0 balance on my online account by April 12th. On April 28th, the defaulted tradelines moved to a "paid" status on my credit report, and DOE reported my previous loans as "paid in full". 

Also note that the 13 student loan accounts could be condensed into one when it does update on your report. 

I currently have no student loans on my report. Check out the student loan thread, and you will see that most people who resolved their defaults the way you did waited 3-4 months before the new servicer picked up their loans and reported it on their credit. My new servicer is FedLoan, and from what I am reading now is that they can also take 4-5mo sometimes before reporting. I'm actually okay with that. I have proof that I have the loans and FedLoan provided me with a mortgage verification letter. It's actually helping my score with those lines not reporting lol. 

[Anonymous]

My loans all currently show a $0 balance/transferred to another office anyways, just looking for them to not be in default anymore.  I have read A LOT of posts in the student loan forum as well.  Some of them had luck with disputing the tradelines right away to get them corrected quicker and others were updated and reporting 30-60 after final payment was made.  I'm hoping it doesn't take too long or that a letter will work to help me get an approval.  Either way, I need a serious score jump before I can do anything.  When my broker ran my credit in February, for some reason only Transunion reported, so I only have one mortgage score (no sense in paying for them at this time if I know I can't do anything) but it was a 505!!!   My Vantage scores have increased, so I am hoping that my mortgage scores have as well.  I haven't had a late payment in over a year.  The only negative that has happened on my credit report in that time is the civil judgement.  Right now, it seems all I can do is wait...  Depending on where my scores are at once that stuff comes off I may try for a credit card with a larger limit as well since I only have $2,200 in credit, but if I am close to a mortgage, I won't do that.