02-04-2011 11:37 AM
I got pre approved for a fha with a credit score of 567 barley made it the lender said, he said i will get my letter once i have my down payment in my banking account , i think they are baseing mine off on our income and our on time payments with our chapter 13
Good luck with that. Squeezing in with a really low score may get you pre-approved, through the automated underwriting, but manual underwriting (they all seem to be doing it now), to get the loan closed will be hell. Even with my mid-score at 700, underwriting for my loan was hell.
Sicerely though, despite the negativity, I realy do wish you well. I hope this works out for you. Just don't be suprised if your loan falls through. Keep us posted!
05-26-2011 07:47 PM
i am thinking we screwed up somewhere. 3 months ago we contacted a mortgage broker- and as soon as he pulled out scores, he said no way- we needed to take 6 months or a year and get our scores up- that there's no way we'd get any loan unless we were at least at 620. (see signature for FICO scores- ours both are in the 550-570 range). We did apply for a USDA loan, because a relative was approved with our same credit score and a much lower income for financing- so we thought we would try. We have the income- that's not an issue. His issue is student loans that he made frequent late payments on (none recently) and my problems are 7 year old judgments and hospital bills from what seems when I was a different person.) From what I have gathered our biggest issue with the low scores, is that we have no current credit cards or auto loans or mortgage or anything, aside from his student loans. Anyways, I have been reading people who were approved for FHA loans with scores similiar to ours- and I'm wondering if we made a mistake by only seeking the advice of one mortgage broker? In the perfect world we would have fixed our credit scores already- but we were ignorant of them until recently. We are currently living with our 3 children in my grandparents cramped home, and frankly, need to get out as soon as possible.
05-27-2011 06:44 AM
It seems you received good information. The best I could do as a lender is an FHA loan with 10% down. This brings minimum middle score requirements down to 580. The underwriter will look at your 7-year-old judgments. Normally items that old are left to die on the vine. That's the best advice I can give you. Just be prepared to deal with underwriter issues. If underwriter feels that judgments are a threat to title, underwriter will require you to take action.
What are you doing to improve your scores? Paying your bills on time is only part of the equation. Underwriter will be looking for proof you can handle credit responsibly. You'll need credit, and they will need to age.
You're living with someone else. This means you don't even have alternate trade lines. You're not paying rent, utilities and cable. Underwriters are looking for evidence that the mortgage will be re-paid. Credit scores are very important - standing alone they are not always enough.
Have you considered renting as an interim measure?
05-27-2011 07:33 AM
Thank you for the reply. Even though we are living with relatives, we do pay them rent on a weekly basis and some things like the trash/internet bill are in our names and we pay them. We have paid them rent for 3 years now and have it documented. =) We have applied for a USDA loan, to see what they say. (A family member was approved with a 570 score and very low income- while our median scores at 570 range- we have about 3 times the income as they had- and we are still way below the income limits for our family of 5) We are planning on getting scores up and moving within the next 12 months- that gives us enough time to get scores up up and save more money. Obviously being cramped in a small house makes us want to move quickly- but I do realize the best thing is to continue raising our scores and move when it works out the best =)
05-27-2011 02:07 PM - edited 05-27-2011 02:10 PM
Paying rent to a family member will not count as a tradeline. It does not matter what they will write or how it is documented.Banks know that can be fradulized to easily. I currently pay rent to my landlord who rents out 10 different houses, but since he is an individual and not a company, it was not be accepted. We tried many different ways. For us, the only alternative lines, they would accept were Rent from an apartment complex or property management company, Electricity, Gas or phone bill. They would not count internet or cell phone bills because it was not deemed a necesity.
I also had great income and pre-qualified for a house twice as expensive as what I was looking for.
Just becasue you get in with a 570, does not mean you will get approved. I wish you all the best and hope you do, but I don't want you to get your hopes up like I did. I went in with a score of 621 and nothing bad on my credit for over 3 years thinking I would be good, but I was still turned down by multiple companies.
Another thing to keep in mind is that the underwriter will look at your middle score, not your upper score. That means that they will be running you as a 551, not a 574, if your signature is correct.
05-27-2011 02:11 PM
Thanks for the reply! i am not getting my hopes up =) We are more just trying with USDA to see what they say- and for their suggestions on what we need to do in order to qualify at the end of the year for a loan.
I have been on this forum for a few months now- and still am really confused on what is the best way to raise our scores- because most of our stuff is medical bills from 5 and 6 years ago. (somewhere i posted a thread showing everything on our credit reports and asking for advice on the best actions to take to raise our scores in 6 months).
05-27-2011 02:29 PM - edited 05-27-2011 02:30 PM
It will be difficullt to do in 6 months. The best thing that I did was to get a secured credit card and use it for at least a year. If you would like to buy a house, you will need 3 solid tradelines that are at least 6 months old if you have a 640 credit score. If it is lower, they will need to be at least a year old.
You can get secured credit cards from many places such as Capital One, Wells Fargo, U.S. Bank and many others. Use them once a month to keep them going and buy a candy bar or something like that on them. If they are all $300 cards, you will want to keep your utilization under $20.
Other than that, just be patient and never miss a payment.
05-28-2011 02:56 AM
I was in your very boat less than a year ago, bcdudley is absolutely correct. I got a secured card (Capital One) and have watched my score improve month by month by at least 7 points (7x12=94 points in one year!). The utilization is key, I am very careful to make sure that on my statement date, my balance is 0 or below 10% of the card's credit line.
There are lots of threads on handling medical bills. They can be tricky and may even be getting ready to fall off your report since they are so old. But keep working at it and I assure you that you can reach your goal score in no time flat!
Best wishes! See you in the 700 club!
05-28-2011 12:22 PM
You have received some good advice above. As a loan officer let me emphasize that your income is not looked at in the initial evaluation. If you don't pass the credit score test, your income is never looked at.
Your middle score, as listed, is 551. That's the only score that counts unless your spouse's middle score is less.