Banks that work with lower FICO

[Anonymous]

Are there certain banks that are willing to do a lower FICO (mine are 605, 599, and 613 currently).  My middle score is 605 and that is below the 620 cut off my bank wants.  They are telling me that as of last month most PMI's also run credit and raise your amount considerably if your FICO is below 620.

My question is this:  Are their banks that use a lower cut off ... say 600?  My bank (National City) first gave me a good faith estimate of 5.875% saying a FICO adjustment wasn't needed.  I thought this very odd considering my score ... and of course she screwed up and is now quoting me a 6.75% rate. 

Could I do better with another lender? I don't want to have more pull my credit report and lower it even further if it won't help.

[jstap01]

Check out www.whogamemecredit.com.

[Anonymous]

I think you mean www.whogavemecredit.com

[Anonymous]

Interesting site thanks jstap.  Most of them are credit cards though.  Does anyone have any banks they would recommend... or are they all the same with the 620 line?

[Anonymous]

Hi Mark, and welcome.

Pulling your own reports is called a soft inquiry. It does not count against you no matter how many times/often you pull it.

If you are not looking for credit card credit, what kind of credit are you looking for?

Installment loan? HELOC? Mortgage?

[Anonymous]

Not exactly sure what you are looking for, but since you mentioned good faith, I am guessing you are trying to get a mortgage.  Wachovia is working with the lowest score right now, from what I have seen, but I am not a proffesional either, you should be able to get an FHA loan fairly easily, they go down pretty low on scores, some dont even consider scores........ and since the fed has lowered to 3% banks should be getting on board again, and I have also heard that at the next fed meeting they are thinking rates wil go even lower........try finding a mortgage broker that can do FHA loans.  good luck

[Anonymous]

also shopping your loan w/in a 2 week period wont lower your score, find a mortgage broker and try FHA or wait till the fed drops again at the next meeting.....I think it is in march

[Anonymous]

Sylvia, Teresa, sorry I guess mentioning that it was for a home mortgage would've helped.  We have a home currently and I had a 720-730 FICO when I bought this home 4 years ago.  My payment is $2964 per month and we've never been late once.  We're trying to get a 2nd vacation home ... DTI isn't that bad ... and my income level is high. 

My problem is charging up my credit cards too far.  My cards are all at about 90% of the available balance.  About 70% of the charges are for work travel expenses.  We bought a new company recently and I've had to charge a bunch of trips and will then get reimbursed later.  This is killing my ratios though.

I have a pre-approval through National City but the 6.75% rate is tough to swallow.  I have a 5.675% on this home ... and had no clue my credit tanked so bad.  My wife handles all of our credit card payments and medical payments (everything else is auto debited).  Needless to say we have a number of 30 day lates and a few medical collections that have hit.  The sad part is the collections were all under $200 and they were all paid ... just too late to not go to collections.  My wife tried fighting the insurance on each of them because we have terrible medical coverage now, and well, that didn't work.

Now we've found the perfect lake front home that we want and find all this out on my scores.  Should I just suck it up and pay the 6.75% rate, and inflated PMI?   Then maybe we could refinance in a year after fixing paying down the CC's and fixing the other credit issues through disputes (a lot of it is wrong). 

Or should I shop around even with my low FICO score?  I did pay $5,400 down on two of the cards and that took them to 23% and 27%.  One card will report tomorrow and the other can't until my next billing statement (on Feb. 28th), which is too late for closing.  Will paying down that one card, submitting a couple receipts or letters from creditors to show things were in fact paid off help enough to bump me over 620?

The house is only $109,000 so I can't imagine a refinance would be too terrible.  My total closing costs now are quoted at about $1,500 and prepaids are also $1,500.  It would be less with refinance right (never done one before)?

This credit stuff is mind boggling.  This site is helping me a lot.  I've always had a high income level and have never had any issue getting the best rates.  I've got a lot to learn..... heh.

Message Edited by Markmysite on 02-01-2008 04:36 PM

Message Edited by Markmysite on 02-01-2008 04:37 PM

[Anonymous]

Mark,

A couple things...  2nd homes are always going to have a higher interest rate than primary homes.  Anywhere from .5% to more than 1% depending on the lender.  Your rate is not so bad after all.  Also, if you calculate the difference between 6.75% and 5.75% on a $109,000 house, the difference is like $70/month.  Mostly in interest charges you can write off at the end of the year for a net effect of basically nothing...

Your closing costs are about 3% of your loan amount which is pretty standard.  Assuming another 3% if you refinance in a year to get that lower rate you want.  Keep in mind the return on investment of a refinance, something that rarely gets talked about.  Let's say you refi to 5.75% and pay $70 less/month.  You've spent approx. $3,270 in closing costs ($109k * 3%) to save that money.  It would take almost 4 years just to recoup the money spent ($3,270/70 per month = 46+ months).

Ummm, now that I think about it maybe you shouldn't buy this house, nah.  By the way, where is this lake and what is the address? 

[Anonymous]

LOL phxdevil.  I guess 6.75% isn't that terrible.  I'm just not used to getting my rates bumped up due to my credit.  I did not realize that a 2nd home raised the rate that much.  I spoke with another online lender (Amerisave.com) tonight to get their take.  They quoted me at 5.75% but the closing costs are huge ... anywhere from $3,000 to $4,500 for closing costs, orig. fees, discount fees, etc.  You can pick whether you want a lower rate, payment, higher closing costs to bring the rate down, etc.

I'm a little worried about some of the reviews I've read about them though.  Still, they are offering a 5.75% rate (6.213% APR with the higher costs up front) on a 30 year fixed.  There PMI is also a lot less than National City ($79 per month compared to $131 with National City). 

In the end, it would make my monthly payment $123 less per month.  You can also get out of the PMI if I hit the 80% LTV ratio in 6 months (as opposed to 2 years with National City).  I just have to decide if I can deal with the bad reviews and potential for a slow closing.