Score needed for buying a house.

[Wishingaway]

My husband and I have made some bad choices with our credit. Right now as it is I have a 512 from EQ and my husbands is 524 from EQ. What does your score have to be to get a mortgage? I know this might take awhile but we are commited to fixing our wrongs. Our main goal is to own a house one day. We have about 10,000 in debt which are mostly medical bills. We have never had a credit card or really any type of credit. What things can we do to fix it?

[topa]

I think the score depends on the lender, but from what I've heard it's above 620 where you want to be. There is more to it as well. 

For instance, I have a fico score of 667 and am looking to be at around 700 when I bring my utilization down to under 10%. However, I have various credit card late payments on my report within the last year. From what I've heard, that will most likely get me rejected when I apply (which I will be doing soon).

So you want to have a 620 fico (keep in mind that the scores provided by TU/EQ/EX are FAKOs not ficos) and above and a clean record within the last year (including no lates) to have a better chance at getting approved.

This link provides the details on the factors that make up the score. http://www.myfico.com/crediteducation/whatsinyourscore.aspx

To get your score up, pay bills on time, open credit cards (once you build up your score), keep credit lines open for a long time, maintain a low utilization. Some other things that you can do is to work with your creditors to get baddies removed from your reports. 

[CAnNY]

If you have no credit cards you need to get at least 2 cards each if you both plan to be on the mortgage. Get over to the rebuild section of the forum to take care of those collections too. After the collections are gone then apply for credit cards. If it will be a while for the collection removals and you can't qualify for CC's then get secured cards. 

All the steps I mentioned are in the rebuild section. You will need at least two TL in order to qualify for a mortgage for a min of at least 6-12mos for FHA I believe. They can use things like utility bills history in place of CCs, but you need to rebuild too and I think most lenders prefer you to have credit cards. 

Best of luck. I rebuilt my credit with this forum for my home purchase and was in my home a year later. I like you had no credit cards until I app for two secured cards this time last year. One for $200 and another for $500. By November I had my pre approval and closed in February. 

Again, Good Luck!

[UTloanofficer]

You generally need a 620, but you can get VA loans with as low as 560, USDA with as low as 560 (if you have 10% downpayment) and FHA loans with as low as 580. However, expect to pay a higher price (as in a point higher in interest, and higher closing costs).

The fact that you have no credit cards is actually hurting your score. In order to obtain a mortgage loan, you'll need a minimum of 3 tradelines: 2 credit cards and a line of credit, or auto loan is a good combination. These accounts have to be active, and have at least a 12 month history of on-time payments. 

Start off by opening a secure credit card or two - you basically have to deposit a minimum of $200, and you use your own money as a line of credit. Make sure to pay off the balance in full every month and not to make late payments (contrary to what some people think, no - you don't have to pay any interest to boost your credit). 

Collection accounts stay on your credit report for 7 years... If you have to chose, try to pay the ones that are under a year old, and leave the other ones alone. The problem with collection accounts is that the balance doesn't matter as much as the date they were last reported. And when you pay them off, they refresh the date of "last reported", so it actually hurts your credit. Anything over a year old will have less of an impact.

Also, mortgage lenders actually ignore medical collections. They will still impact your credit score, but they won't matter when it comes to getting a home loan.

mod cut

Good luck on rebuilding your credit, and getting into a home. It's not as difficult as you might think, it just requires discilpine and patience - and it's well worth it.

[ezdriver]

I encourage folks who are rebuilding to take the big-picture view [considering your overall credit profile vs just score] from the getgo. As was posted above, a couple of revolving tradelines combines with an installment loan is a sound enough foundation on which to build a robust credit profile. For those intending to buy a home at some point, know that scores are just the ticket to the dance but your overall credit profile is what the underwriters are going to focus on.

[Mellochick]

what lender did you find that would do USDA with 560?