Personal loan - hard to qualify for

[House2021]

So I'm wiping out all my savings on a 20 percent down payment on a house which leaves me no funds for window treatments fans moving company, landscaping etc. I was thinking of applying for a personal loan after close of escrow - my credit is not the best, is it hard to qualify for? Basically my credit now is fico8 676, 636, and 644, what score model do they use to qualify you? I will have all paid charge offs from 5 years ago, no missed payments in 5 years, and, no collections, good income, $22,000 in student loans. Should I apply at a credit union, major bank, or is there one of those companies that sends mailers I should try for? What are my chances for approval? Should I just try for credit cards instead? I only have $6900 in available open credit lines. 

[Slabenstein]

The answer to most of your questions is, "It depends on the lender."  Some will have tighter UW than others and different lenders will use different FICO versions.  With scores in your range, I would check with local credit unions or credit unions of which you are already a member and avoid the online subprime lenders, which usually charge usurious interest.  From your scores and your current revolving TCL, I wouldn't necessarily expect a large loan if approved, but that will also depend on aspects of your profile that you haven't shared, as well as a lender's own inscrutable UW.  In addition to the CO's and lates from 5+ years ago, what else is holding down your scores?

[ldkcivilservant]

Is Discover one of you open credit lines? They are usually pretty good at offering 0% APR periods if you threaten to close the card.

Personal loans are harder to get, since they are not collaterlized. You might waulify for one with your scores, but I am not sure you would like the interest rate very much.

Are you paying the 20% down to avoid PMI? Have you considered FHA?

[Horseshoez]

@House2021, in your case I would look for a Home Equity loan, the difference is the personal loan is unsecured, the HELOC is secured and should allow you an easier path to approval and a lower interest rate. 

[House2021]

How much are the closing costs usually on a Heloc?

[Horseshoez]

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@House2021 wrote:

How much are the closing costs usually on a Heloc?

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I don't remember what I paid the two times I've opened a HELOC, but I don't remember it being all that much.  In both cases, I bought the house with a built in HELOC where I put down 20% and then immediately took 5% back from the HELOC.  Given the first and second mortgages were through the same lender and the paperwork was completed as a package, I'm thinking I only paid a couple hundred extra for the HELOC.

[Golf-and-Credit]

I agree with @Slabenstein.

Look into your local credit unions. And if you have a relationship with one already, that could benefit you even more. A lot of sites offer a pre-qual to check your rates. Search the soft pull pre approval thread on here! Just make sure you don't do anything until home alone is funded and keys are in hand! Good luck to you and congrats on the new house!!!

[House2021]

Idkcivilservant I'm actually putting 20 percent down because I can't qualify without that much down, I currently don't qualify for conventional at all I'm hoping to get my score up, otherwise I'm putting just shy of 20 percent down for an fha because the fha loan limits are low in the county I'm purchasing in, it truly is terrible because even with that much cash down, I still have to pay $315 a month in mortgage insurance plus $8000 extra in closing costs because of the fha funding fee, so because I'm wiping out my savings I need to figure out how to pay for movers, blinds, landscaping, etc. FHA loans are great if you can't get a house otherwise, but it sure is costly! Fingers crossed I can get the 11 points I need to qualify for conventional. 

I already have a Discover card, I'm not concerned about interest rates because I would just need to carry a balance for only  3-6 months then pay it off, I just have only $6900 in available credit cards. I definitely won't open anything, charge anything, or apply for anything until escrow closes. 

[House2021]

Slabenstein, nothing else is holding down my scores, all I have is the 5 charge offs (the last two will soon report paid, one car charge off that I'm trying to pay, and $22,000 in student loans with excellent payment history, no auto loans open, no debt other than the student loans and AZEO on my open credit cards, I usually charge $10 reporting on one card the rest zero, it's a real shame I made mistakes 5 years ago and my credit still hasn't recovered that well even after paying all delinquent debt off except the car loan.

[Slabenstein]

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@House2021 wrote:

Slabenstein, nothing else is holding down my scores, all I have is the 5 charge offs (the last two will soon report paid, one car charge off that I'm trying to pay, and $22,000 in student loans with excellent payment history, no auto loans open, no debt other than the student loans and AZEO on my open credit cards, I usually charge $10 reporting on one card the rest zero, it's a real shame I made mistakes 5 years ago and my credit still hasn't recovered that well even after paying all delinquent debt off except the car loan.

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If you don't have any reporting derogatories newer than 5 years ago & esp. if you can get your auto CO to report paid, I think credit unions will be a good place to look, if you decide to go the uns PL route.  Again, I don't know whether you would get an approval for an amount that will be enough for your purposes, esp if you have no prior relationship with the CU, but I think CU's are, in general, more forgiving of aged derogatories and sub-680 scores than the big banks, and definitely will have better rates than the predatory online lenders.