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Mortage loan with 612 credit score

I live in Cleveland Ohio, I was approved for a loan and once I found a house the lender informed me me credit score dropped from 633 to 612. A creditor resubmitted information on my credit report that was previously on there, and I've made on time payments with the creditor. The mortgage lender said I have to put buying a home on hold, but I wanted to see if there is a lender who would approve me with a 612 score. I'm currently working with a credit consolidator to remove negative items on my report.
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July 30 2013 - Cleveland Heights
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Answers (2)

I definitely agree that you'd be offered better terms if your score was above 620. What I mean is that lenders impose adjustments to rates and their respective costs based on a risk-based assessment. Therefore the higher your credit score and good overall profile, the better the ultimate terms. The concern I would have is that you've begun working with a "credit consolidator"? I'm not sure what that means ie credit counseling or a company who handles debt settlements however, they aren't considered credit counseling..? Just be careful as disputing accounts, settling for less than the agreed balance, all of that and more will impact your credit.  Also, contact your accountant as you may receive 1099s for the balance they wrote off. 


For someone with your current credit score this is what we'd look for:  You'd still only need 3.5% down for FHA. However, you might need three to six months reserves in the bank (6 months worth of mtg payments) depending on your profile/circumstance. Gifts and/or 401k/retirement funds cannot be considered for the reserves, they can only be considered for down payment and/or closing costs. If you have any judgments, this particular investor does require they be paid. You cannot have: any late housing payments the last 12 months; lates in the last 6 months including collections/charge-offs/judgments.  Now---- I know you mentioned that they put an account on your credit. What are the dates? You say it's something that you're aware of, possibly an older account? It will depend on the account and how it's reported. -- Since you say you were paying said account, maybe the transfer to a new collection agency OR them adding it to credit was in error? It would be worth investigating. Especially if this is the only account that seems to be your biggest hurdle..? If you have any follow up questions to the information provided, I'd be happy to help. Best Wishes, Kim Lawson (Licensed in Ohio only.) Mortgage Loan Originator. Contact and licensing information can be found on my profile.
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July 30 2013
There are lenders who will allow purchases with credit scores under a 620 however, it is in your best interest to wait until your score is at a minimum of 620. Shop around for different mortgage companies to inquire which ones allow a credit score of less than 620 for FHA purchase loans. For loans with credit scores of less than 620, normally it is more costly for you to get the loan done because a credit score of 619 or less has more risk than scores of 620 or more. It is in your favor to wait until your credit score is at least 620.
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July 30 2013
 
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