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Established Contributor
cwwatts1202
Posts: 689
Registered: ‎12-01-2011
0

USDA loans and credit score

I am going to be applying for a USDA direct loan in a couple months. I have a few things to get removed from my CR. I know with this loan you need to have a 640 credit score, mine is around 600, if I can't get the few collections I have on there deleted, but I pay them and they are a paid status, is there any chance I could get approved for this loan? I do want to add I have a repo from 2008 for 8,000 dollars I obviously can't pay so that will still be on there, and an apartment complex from 2006 that charged me with items falsely I refused to pay, the amount is 2,400. Those 2 things will remain because I don't have the money to pay them. But I have a new auto loan opened in January, and I'm at 9% utilization. I know they will over look the 640 credit score if you haven't had any collections in the past 12 months, no bankruptcies or foreclosures in the past 3 years, and a few other things and has far as all that goes I don't fall under any of those categories. So I'm curious if I pay off everything but the repo and apartment complex if id have a chance.
Frequent Contributor
Familywantsahouse
Posts: 291
Registered: ‎02-25-2012
0

Re: USDA loans and credit score

We sent in our application last week. My understanding is if you are a sub 640 you cannot have any collections. If you are above 640, they will overlook a couple baddies with good explanation.

 

2/24 (Lender Pull) EQ 613, TU 553, EX 589
April EQ 633, My Fico TU 638, EX ??
Current EQ 643, TU 652, EX 633 (lender pull 5/11)
Goal (we made it!!)- Over 640 middle by 5/15
Established Member
yoman1126
Posts: 41
Registered: ‎03-15-2012
0

Re: USDA loans and credit score

My LO said if we didnt have a 640 then no USDA which i dont get...

Established Contributor
cwwatts1202
Posts: 689
Registered: ‎12-01-2011
0

Re: USDA loans and credit score


Familywantsahouse wrote:

We sent in our application last week. My understanding is if you are a sub 640 you cannot have any collections. If you are above 640, they will overlook a couple baddies with good explanation.

 


So I'm guessing that means even if I get everything gone/paid except the repo and apartment complex, it's a no go? Their website is misleading, as well as the application pack they sent me, cause it says "no collections in the past 12 months" no 30 day lates/slow payments, no slow/late rent payments, no bankrupcies/foreclosures in 3 years, no tax liens, judgements, charge off's etc. everything it had listed that you can't have if you have less then a 640, I don't have. Everything on my CR is at least 4 years old and im on time with my current auto loan and CC and at a 9% utilization. I plan to get all the collections gone/paid except the repo and apartment complex, but the apartment complex is set to fall off May 2013. I'm not planning on applying till later this year when all the collections are gone/paid, so I can pay the apartment complex off by then if I have to, but I will not have the money to pay off the repo, ever. Just not sure why they say you can get approved with less then a 640 under "these" conditions, if they don't mean it?

Frequent Contributor
Familywantsahouse
Posts: 291
Registered: ‎02-25-2012
0

Re: USDA loans and credit score

This is what I am going off of...I've also been in contact with our USDA rep and gone over all of our personal credit issues and he said based on what I described, we'd still qualify with a sub-40, but once all my PFD's actually report we should meet these guidelines.

 

Unacceptable Credit

  • Little or no credit history. The lack of credit history on the credit report may be mitigated if the applicant can document a willingness to pay recurring debts through other acceptable means such as third party verifications or canceled checks. Due to impartiality issues, third party verifications  from relatives of household members are not permissible.
  • Payments on any installment account where the amount of the delinquency exceeded one installment for more than 30 days within the last 12 months.
  • Payments on any revolving account which was delinquent for more than 30 days on two or more occasions within the last 12 months.
  • A foreclosurethat has been completed within the last 36 months.
  • An outstanding Internal Revenue Service (IRS) tax lienor any other outstanding tax liens with no satisfactory arrangement for payment.
  • Two or more rent or mortgage payments paid 30 or more days late within the last 2 years. If the applicant has experienced no other credit problems in the past 2 years, only 1 year of rent history  will be evaluated. This requirement may be waived if the program loan will reduce shelter costs significantly and contribute to improved repayment ability.
  • Outstanding collection accounts with a record of irregular payments with no satisfactory arrangements for repayment, or collection accounts that were paid in full within the last 6 months, unless the applicant had been making regular payments previously.
  • Non-Agency debts written off within the last 36 months, unless the debt was paid in full at least 12 months ago.
  • Agency debts that were debt settled within the past 36 months, or are being considered for debt settlement.
  • Delinquency on a federal debt.
  • A court-created or court-affirmed obligation or judgment caused by nonpayment that is currently outstanding or has been outstanding within the last 12 months, except: ◊ A bankruptcy in which: ♦ Debts were discharged more than 36 months prior to the date of application; or ♦ Where an applicant successfully completed a bankruptcy debt restructuring plan and has demonstrated a willingness to meet obligations when due for the 12 months prior to the date of application. ◊ A judgment satisfied more than 12 months before the date of application. An applicant with an outstanding judgment obtained by the United States in a Federal court, other than the United States Tax Court, is not eligible for a Section 502 loan. This requirement is statutory and cannot be waived.
2/24 (Lender Pull) EQ 613, TU 553, EX 589
April EQ 633, My Fico TU 638, EX ??
Current EQ 643, TU 652, EX 633 (lender pull 5/11)
Goal (we made it!!)- Over 640 middle by 5/15
Regular Contributor
cd2004
Posts: 147
Registered: ‎07-19-2010
0

Re: USDA loans and credit score

I am looking to apply for USDA guaranteed and I was told that I need a 640 now.. a few months ago in Sept I was told 620 was good with no questions asked about credit

Starting scores Jan 2011: EQ: 510(fico) TU:521(fico) EX?
June 2014 scores EQ08:683 TU08:667 EX:651(amex)
Goal: 700's

in my wallet:BarclayMR $7k/CareCredit $7k/DiscoverIT $6k/Ashley furn. $5k/Springstone $5k/Kanes furn $3.5k/Walmart $2.7k/Cap 1 Plat.$ 2.5k/JCP $2.5k/Chase freedom $1.7k/TJX $1.7k/Cap 1 cash $1.5k/Amex delta $1k/Victoria $950/Paypal $800
Regular Contributor
Scope27
Posts: 232
Registered: ‎08-30-2011
0

Re: USDA loans and credit score


cd2004 wrote:

I am looking to apply for USDA guaranteed and I was told that I need a 640 now.. a few months ago in Sept I was told 620 was good with no questions asked about credit


Same thing happened to me.  The bank loan officer told me a 620 mid score and I was like 10 points short.  I got my scores to a 642 TU and a 636 EQ.  She then repulled and was like I needed my EQ to be 640 and hung up on me (I then found another bank where the LO wasn't rude in the response and explained the process to me).  In my understanding, if you are going the guaranteed route its the bank you are dealing with that can set the standard on minimum middle score.  My bank wasn't picky with my past credit mistakes being that they were over 4 years old but the underwriters are the ones that begin asking questions and I only need one letter of explaination for a gifted fund.  Take the time and get a score over 640 to account for additional inquiry hits if your last mortgage pull was over a few weeks apart.  It'll make the process much smoother.

Frequent Contributor
germaine47
Posts: 305
Registered: ‎07-05-2011
0

Re: USDA loans and credit score

I am going through the USDA Guarantee Loan.  My MB told me that the minimum had to be 640 in which I was surprised, I am kinda glad because my conditions was simple and less stressful.  I only had to write LOE for 2 new accounts  and 1 inquiry for last 90 days and of course you still had to send the financials like 2 months paystubs, 2 months bank statements and 2-3 years on W2s and tax statements. In UW now, I am still hyperventilating just a little until they say clear to close.

 

 

Fico September 2012; TU 681, EX 674, EQ 652
Fako October 2012: TU 706, EX 641,

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