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Profile picture for visionzmg

Mortgage with a 555 Median score???

Hello,

about 6 years ago, I bought a car that I couldn't afford, and made various poor decisions which ultimately proved disastrous after I lost my job.  I had 2 cars repossessed, and a few charge offs.  That being said, over the past 2 years I have paid or settled every delinquency.  I have new car loans that I can afford (haven't missed a payment in 2 years) and have 3-4 low limit credit cards (haven't missed a payment in 2 years).  Combined with my wife, I make about $90K per year and have about $8K in savings. 

I know that I need to get my score up to a 620-660 to get an FHA loan, but am wondering if there are any options available to me now.

I have done nothing but pay for my past mistakes, and fortunately have learned from my experiences.  If my only option is to sit and wait for another 2 years then I will accept that.  However, I am interested in further discussing any options I may have.
  • February 14 2010 - Everett
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Answers (12)

Is everything reporting accurately on your credit report?  That score seems rather low if everything deliquent is paid and all recent credit is paid as agreed for the last two years (if everything is reported properly).  Are you carrying balances on those credit cards that are close to the limit? 

There are some lenders that will go down to 600 and some even claim to go down to 580.  I don't think you will have to wait two years.  I would recommend sitting down with a loan officer that will take a look at your credit and give you some feedback on how to get your score up.
  • February 14 2010
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The minimum score to get a loan these days is 580. Most Lenders want a 620. It sounds like you have all the areas of an approval covered except the score. I've worked with people in the past and have had success boosting scores 25 points and more to get over that 580 hump. It's called a rapid rescore.

I'm not sure what state you are in, but check our Lender profiles to see who is licensed in your state, see if they have a 580 and rapid rescore program.

Sounds like you are almost there!

Robert

  • February 14 2010
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  • February 14 2010
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Keep in mind the lower your score the higher your interest which can then make a house near unaffordable. Which in turn could put you back in the same position as when you had a car you couldn't afford. Your best bet is to take a look at all of your credit reports from all 3 bureau's as each report differently, dispute what is incorrect. Build your score up with the advise of a loan officer, pay down all your cards, only keep 2-3 credit cards, pay more on your car, keep your debt low & think about it when you get your score higher.  As hard as it is to tell you these things, I won't tell you any other after watching all these people across the country loose their home. 

It's not only a mortgage payment, their is insurance, property taxes (which go up with value), repairs, maintenance, so the # the loan officer gives you as your monthly amount is not a true $ amount for a home owner when you add the other items in.
  • February 15 2010
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I'm wondering if you might be able to raise score by paying down the balances on the low limit cards.   A common mistake on credit rebuilding is to keep higher than necessary balances on these $300 limit accounts.

If you pay these all down to balance of $50 or less, you might get that boost required.   As mentioned, FHA is available at 580 or better so you are pretty close, and the income/down payment should be enough to qualify.
  • February 15 2010
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Profile picture for visionzmg
Thank you to all that have answered.  I will have all of my credit card balances paid down to 25% of the limit amount by the end of next month.  I know that this can take a few months to update properly on a credit report, and I would like to be able to purchase within the next 6 months. 

I am also currently working with a dispute company to write our disputes (yes, I know I can do this on my own.  However, I feel a 3rd party will keep up with it much better than I would.) 

Please let me know if there is any additional steps you feel I could take.

Thank you for your time.

  • February 15 2010
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Thanks for coming back with an update, that's really cool! What area will you be looking?



I have seen success using 3rd party credit disputers such as Lexington Law.  It sounds like you're on the right track.



Good job!
  • February 15 2010
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Profile picture for RJ Ham
Looks like you are headed in the right direction and working with a third party disputer is a good step.  When selecting your third party company, do your research.  A good company will not charge up front and will do itemized disputes not blanket disputes.  A good way of knowing how a company disputes is if they boast about 1st and 2nd round dispute percentages, if done correctly you should only need to dispute once and you should have all results with in 45-60 days.  In some situation it can take longer but if all your debts are paid off it should be accomplished in the 45-60 days.
  • February 17 2010
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Profile picture for Justin Kennedy
be every carefull with the disputes, if the any tradelines refferance disputes you will need to remove those disputes before the lender approves any FHA application. some lenders go down to 600 credit score, Guild Mortgage in your state is allowing 600 creidt score. link
  • February 17 2010
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Profile picture for DaveAndersson
There is a lender that does FHA loans in WA with credit scores below 580. They would require 10% as a down payment which can come in the form of a gift. If your score is over 580, they will do an FHA loan with 3.5% down. Let me know if you are still looking for help and I can point you in the right direction.
  • March 22 2010
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Call me. I can discuss multiple options that will help you increase your score and repair your credit. [Content removed by moderator due to self-promotion] My name is Thomas Martin.
  • March 25 2010
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It is better to have several credit cards with low balances compared to the limits, than to have one or two at the maximum limit.  Your credit score will be improved.   Keep your balances below 30% of your limit.  You need to maintain 3-5 trade lines total for the best results. Credit from a bank or credit union is better than from a finance co.   [Hotlink removed by Zillow moderator. Please see our Good Neighbor Policy.]
  • May 08
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