Looking to buy a home with a low credit score?
Although banks effectively stopped lending after the mortgage crysis, they quickly discovered it was bad for business. And the federal government agreed in many ways which motivated changes that to help individuals with sub-par credit.
Although there are lesser-known methods for raising credit scores, not everyone has the knowledge and resources required to take advantage of these loopholes. Fortunately you can still qualify for non-standard loans using government backed programs.
Alternative Porgrams For Anyone With Poor or Bad Credit
If you want to buy a home, but your credit isn’t above 720 it will make getting a mortgage a tough task, but it doesn’t mean you’re completely out of luck.
Before you have a reasonable chance of being approved for a conventional mortgage, you need a FICO score of at least 620 (see Investopedia’s article “What Is a Good Credit Score?”) and probably 12 months of on-time payments of all of your bills. Additionally, your debt-to-income ratio, the amount of your monthly income going to debt payments, probably can’t be higher than 43% of your monthly gross income. Of course, few rules are hard and fast, so take these as general guidelines. If you’re close, it doesn’t hurt to apply. via: Yahoo.com
Easier Standards for Borrowers
The new regulations took effect on Dec. 1, so results of the new rules should be apparent soon. However, Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, says that because the changes are big, it can take some time to see their full impact. Among the changes coming to home loans:
- Faster turnaround times. Lenders, including SunTrust Banks and Wells Fargo, say that borrowers should see their applications processed more quickly. Generally, it has taken two months or more for an application for a loan to be expected. But turnarounds should be faster within the first few weeks of the new policies.
- Less punishment for one-time lapses. Borrowers whose credit scores have taken big hits because of one-time events like job loss, a large medical bill or other personal catastrophes will find a more forgiving environment.
- Fewer credit overlays. Lenders have been asking for extremely high credit scores and also asking for guarantees that include high income and high balances in the bank. Fannie Mae and Freddie Mac say that those stringent restrictions are more than they require, so these could be reduced or go away completely.
- Less rigorous documentation. Under the previous system, a borrower who had a late payment on a car loan could have been asked to write a memo that detailed what happened and why the payment was late. This could be required even when the minor negative mark was not preventing the borrower from getting a loan. Under the new system, this sort of documentation will be less common, leading to quicker processing of loans.
- Lower credit scores okay. In the past, many lenders would not consider a borrower under a score of 660. But, mortgage company Mason-McDuffie of California said that the new rules can let them consider credit scores as low as 620, which is the limit for loans that are backed by Fannie Mae or Freddie Mac. via: Key Credit Repair
What If You Still Need To Raise Your Score?
Traditional advice for raising credit scores can be dreadfully boring and infelxible. Most will advise you to “pay your bills” and “dispute errors” but what do you do when your credit report is accurate and still low?
The answer isn’t so short that it can be explained in a brief web post. The process for improving your credit is systematic and requires that you follow a specifc set of steps. These steps are designed to make use of the credit reporting laws that were designed to protect consumers… to protect you.
And you have three options with this approach. Option one -Ignore the problem and hope that time repairs your credit ( a legitimate option if you pay all bills on time for the next 7 years ) .Option two – call our toll-free number and get profressional assistance. Option Three – Download our free credit repair guide and get started yourself.