Own Home & Acreage Outright, Need a Loan

[DaisyDuck]

I own 26 acres with a 2 bedroom house outright (paid cash for it) but now I need to take out a loan and am wondering if I can do it and which loan would be best.

I am self-employed as a farmer for one year.

Credit scores is around 550 but not because of bad mortgage history.

Do I have a chance or should I figure something else out?

[meehan22]

If you have bad history with credit cards and other loans a mortgage is a much bigger deal than small lines of credit.  I'd suggest pulling your reports and see if anything on there is stated or easily can be cleaned up to raise it a little bit.  Otherwise depending on what equipment you have that you own outright and value you can always find a bank to use as collateral. Probably be your best bet depending on the loan needed.

[DaisyDuck]

Isn't the house and acreage collateral enough? 

It's frustrating that I have zero credit card debt, no mortgage debt...virtually no debt at all...and my FICO score is low!

If I were in a house that needed refinancing I could get a loan but paying cash outright seems to have hurt me. Arghhh.

[meehan22]

If you dont have any collections, judgments, tax liens, etc I would say that would be collateral enough.

What exactly is on your report? Somewhere along the lines have you had ANY kind of credit?

If there is anything negative i'd pay that first before going to the bank.

[axxy]

There have to be reasons why your score is 550.  Those reasons are what they care about.

[StartingOver10]

The OP said he doesn't have cc's and no loans. That would be a pretty good reason his score is low. He probably can get a good boost by getting a low limit card like Capital One and one other.  He will need to have it long enough to show he can pay on time every month.

I see an issue with the size of the land though. Most lenders won't finance a large parcel unless they are small regional lenders around the property or Farm Bureau Bank that is accustomed to large tracts of land.  Most residential loans limit the size of the parcel to 5 acres or less.

https://www.farmbureaubank.com/

[ShanetheMortgageMan]

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@DaisyDuck wrote:

Isn't the house and acreage collateral enough? 

It's frustrating that I have zero credit card debt, no mortgage debt...virtually no debt at all...and my FICO score is low!

If I were in a house that needed refinancing I could get a loan but paying cash outright seems to have hurt me. Arghhh.

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If you don't want a lender to ask you too many questions, you should be able to get a hard money or private money loan... the terms aren't attractive at all, but all they care about is equity, the saleability of your home and your ability to repay.

[ezdriver]

I agree with Shane's feedback above. I think that hard money or loan from local bank/credit union are the best options.

The OP may want to do some research to learn about redential lending from the lender's perspective. Bottom line is that you have to have credit to get credit ... generally speaking. If one prefers to live without credit, then don't be surprised when you need it and lenders say no, sorry but we do not know enough about your ability to manage/repay credit.