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Jpeffley
Posts: 5
Registered: ‎02-10-2014
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Can I buy a house in April.??

My current score is 584. Does anyone know if I can reach a credit score of 680 by the end of April? I have one collection account that's about to be paid off and my credit cards (two) will be paid down by then also. I just want to know if I'm delusional in thinking this is possible.

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Dw4250
Posts: 699
Registered: ‎03-04-2013
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Re: Can I buy a house in April.??

Do you know what all three of your scores are?  Climbing 100 pts is a tough lift, unless you are: a) maxed out on available credit and can pay it off and/or b) you can have baddies removed or they age off.

 

Most mortgage lenders pull all three CRA's, and whichever score is in the middle is what they use to qualify you.

 

Why 680?  I was able to refi my house last year with a middle score of 640 (FHA-backed).  I believe for FHA qualification, all you need is a middle score of 620+.  Interest rates will be a little higher, but not appreciably so, and once you get your scores up in a couple of years, you can refiance with a conventional loan. 

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New Member
Jpeffley
Posts: 5
Registered: ‎02-10-2014
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Re: Can I buy a house in April.??

I only have two credit cards and one is maxed out but will be paid down below 20% by the end of March. The other credit card hasn't been used in a while. And I have one collection that shows a total of 10k but I only owe $130 which will be paid off the end of this month. I was told by a local bank here that 680 was ideal in getting a home loan. Do you know if your credit score differs by state for buying a home?

Valued Contributor
newmomnewme
Posts: 1,305
Registered: ‎09-30-2013
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Re: Can I buy a house in April.??


Jpeffley wrote:

I only have two credit cards and one is maxed out but will be paid down below 20% by the end of March. The other credit card hasn't been used in a while. And I have one collection that shows a total of 10k but I only owe $130 which will be paid off the end of this month. I was told by a local bank here that 680 was ideal in getting a home loan. Do you know if your credit score differs by state for buying a home?


Welcome to the Forums!!!

 

credit scores differ by credit reporting agency (they are all calculated/weighted differently). as pp stated, a 640 middle score would make you eligible for FHA and USDA as well as some conventional loans, at 680 you would be in a better position maybe for a lower interest rate or better terms. we are all just guessing at possible score changes without knowing all of the information in your credit file. Paying your credit card down and letting it report at less than 9% and the other at 0% while paying the collection off and asking them to REMOVE it from your reports might give you the best chance for a signifigant jump in score.... but there are other factors calculated into your score. 

 

you might want to order your free annual credit reports from all three CRA and get scores from this site. when my mortgage broker pulled all three scores for me, they were VERY close to the scores i purchased from this site. 6 weeks isn't much time to get your score up almost 100 points, but I am sure it can be done....I did it in about 2 months (but I had PR and other baddies removed). Best of luck and keep asking questions...someone will be around to help you with answers.

 

 



Starting Score: May 2013 EQ: 577 TU: 537 EX: 555
Current Score: EQ: 600 TU: 644 EX: ??
Goal Score: ALL 720+

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Established Contributor
Dw4250
Posts: 699
Registered: ‎03-04-2013
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Re: Can I buy a house in April.??

For FHA qualifications, I believe it is 620 middle score nationwide, unless there has been a recent change.  680 is probably the entry level for a conventional loan...I would ask around in your area and see if there are any mortgage brokers who work with FHA loans (there should be plenty).  An FHA loan has its drawbacks, but given your current profile it may be a better option as 680 will be tough to reach by April IMHO.  

 

Maxing out your cards (even one) definitely hurts your score, so paying it down to <20% will help your score for sure.  Paying off the collection won't help your score, BUT it will help with the approval process (usually you will not be approved for a mortgage unless unpaid debts are settled no matter how high your score).

 

Remember too, even when you pay down your cards, you will still need a month or so for those changes to show on your credit report.  So paying off at the end of March won't matter for FICO, unless you are close to the due date.  Good rule of thumb is updates show on your report maybe a week after the statement closes for the month.  For optimal scoring, I would try to have one card report $0, then have the other report between 1-9% avail credit.  Does the card you never use have a balance?

 

Since you have a couple of months, I would ask a loan officer if he/she can do a soft pull for you (some will; some won't).  This will give you a better idea of your 3 true scores, and you can strategies from there.  The EQ score you get here is the same lenders use, but EX and TU are a total guess without a lender pull.  Do not rely on scores from sites like Credit Karma!

 

Good luck!

 

 

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Established Contributor
titanofold
Posts: 558
Registered: ‎11-13-2013
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Re: Can I buy a house in April.??


Dw4250 wrote:

For FHA qualifications, I believe it is 620 middle score nationwide, unless there has been a recent change.  680 is probably the entry level for a conventional loan...I would ask around in your area and see if there are any mortgage brokers who work with FHA loans (there should be plenty).  An FHA loan has its drawbacks, but given your current profile it may be a better option as 680 will be tough to reach by April IMHO.  

 

Maxing out your cards (even one) definitely hurts your score, so paying it down to <20% will help your score for sure.  Paying off the collection won't help your score, BUT it will help with the approval process (usually you will not be approved for a mortgage unless unpaid debts are settled no matter how high your score).

 

Remember too, even when you pay down your cards, you will still need a month or so for those changes to show on your credit report.  So paying off at the end of March won't matter for FICO, unless you are close to the due date.  Good rule of thumb is updates show on your report maybe a week after the statement closes for the month.  For optimal scoring, I would try to have one card report $0, then have the other report between 1-9% avail credit.  Does the card you never use have a balance?

 

Since you have a couple of months, I would ask a loan officer if he/she can do a soft pull for you (some will; some won't).  This will give you a better idea of your 3 true scores, and you can strategies from there.  The EQ score you get here is the same lenders use, but EX and TU are a total guess without a lender pull.  Do not rely on scores from sites like Credit Karma!

 

Good luck!

 

 


I haven't been able to find any lenders that would take a 620 middle score. All I can find are lenders that require a 640.

 

FHA has their requirements, but the lenders can raise the bar on those requirements.

Scores2013-09-21Current
Equifax630 (LP)621 (Quizzle)
Experian640 (FCR)682 (FCR)/673 (CS)
TransUnion588 (CK)664 (CK)
New Member
Jpeffley
Posts: 5
Registered: ‎02-10-2014
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Re: Can I buy a house in April.??

I was told that I could possibly get financed with a 620 score but I didn't know that all three scores were taken into account. Another question I had is where could I find out how much I could finance for a home loan? I have $7k to put down right now.

Established Contributor
Dw4250
Posts: 699
Registered: ‎03-04-2013
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Re: Can I buy a house in April.??

First, I would advise going through a mortgage broker (as opposed to walking into Chase, Wells Fargo or another large bank).  The brokers work with many different banks and CU's, and can shop around to get you the best deal.  Go with someone reputable (find a friend/family member who's used them before, or ask the broker for a couple of references).  They should be able to find someone who will work with a 620 middle score.

 

In terms of how much home you qualify for, that is determined by your debt to income ratio (DTI).  Do a google search for "how much home can I afford" calculator.  Zillow has a really good one.  The go-go days of a waitress making 25K being able to qualify for a 400K mortgage are long gone.  Banks are much more restrictive about how much they will qualify you for.  Rule of thumb is basically your mortgage cannot be >25-30% of your monthly gross income. 

 

If you have $7K to put down, you may have no choice other than going the FHA route.  They usually require a 3.5% downpayment.  A conventional loan is much more (10-20%).  Some conventional loans will let you put 5% down, but you have to have exceptional credit. 

 

Is there a reason this has to be done in April?  With enough credit, you can always find someone who will give you a loan.  The larger question you must ask yourself is "should I do this now?".  Only you can answer that definitively.  But speaking as someone who has rushed into some financial decisions that I later regretted, sometimes waiting to make sure you are on firm financial/credit footing before making such a large investment is the better option.

 

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New Member
Jpeffley
Posts: 5
Registered: ‎02-10-2014
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Re: Can I buy a house in April.??

Thank you for the indepth response! I'm slowing down and taking my time with such a big investment. I've paid off all of my debt so I'm just watching the market and easing into a mortgage..whenever the time is right! 

Established Member
gypsymama
Posts: 44
Registered: ‎02-03-2014
0

Re: Can I buy a house in April.??

I completely agree with Dw4250. If it's at all possible waiting to improve credit and up your financial standing will help a ton in getting a home and being sure you can keep it. I found this out the hard way myself when I bought my first home thinking we'd had stable jobs and income for a couple of years and enough for a FHA dp that we'd be ok. We weren't :smileysad:. Now I have to rebuild to be able to buy a home again and have that foreclosure on my report. We're working towards being able to buy a home again but thanks to this site I have a ton of info on how to properly build and use credit. We're planning to wait to buy for at least 2 years while we get our financial situation better, improve credit and work towards an "ideal" standing for getting a loan. It's going to take a lot of time and hard work but it's worth it to never have that kind of heartbreak again. I would highly recommend waiting and working hard on credit and financial standing in the meantime.



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