For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580-600 to qualify for the low down payment advantage, which is currently at around 3.5 percent. If your credit score is below 580, however, you aren’t necessarily excluded from FHA loan eligibility. And a period of time focusing on repairing your credit with a professional can help you get over the hump.
The better the Credit Score and Credit History = The easier it is to qualify for the loan
Take an FHA loan for example. These loans provide specific assistance to a number of first time home buyers and those looking to get started back into the housing market by offering mortgage loans with lower down payments than those of traditional or conventional loans. Some people are held back from these types of loans because of their credit history, and it may require a brief period of focused credit repair to get back on track and into a position to purchase.
The credit score is definitely not the only factor that the mortgage lenders considered when approving a mortgage, it does play a very important role in setting the ultimate interest rate that you will pay. Even if you initially qualify, it may be in your best interest to go thru a period to repair any ding on your credit and boost the score that is used by the lender. Doing so will be a prerequisite for obtaining cheaper home financing. This will lower the interest rate charged. The lower the rate, the lower the monthly payment. This one action of improving your credit can keep thousands in your pocket. is the most critical . To date, a credit rating of at least 660 will qualify you for a decent mortgage interest rate, though other factors such as the amount of savings you have and your income level may help boost your appeal to lenders.
The Factors that THEY look at to determine Your Credit Score
Credit scores are a made up system by the banks and financial community. For some reason that no one can explain, credit scores range from 300 to 800, with the higher the number being the better. The credit score is impacted by such factors as your payment history, outstanding debt balances, new credit lines opened, length of your credit history and types of credit used.
According to the Fair Isaac Corporation, on of the groups that has provided some information about how your score is determined, has indicated that the calculation of your credit score is slanted heavily –about 65 percent–against your payment history and outstanding debts owed.
Knowing this, it is important to keep all your debt payments current and to maintain a low balance-to-credit-limit ratio.
Why You Need to BOOST your Credit Score
While the 580-600 FICO score threshold is a major factor in how an applicant will pay for a mortgage, your credit score isn’t the only thing the FHA lenders take into account.
If you had an opportunity to BOOST your score, why wouldn’t you?
Credit Repair and Credit Boosting is not just for those on the threshold. It is for any one that has an opportunity to put a better foot forward.
Payment history, bankruptcies and foreclosures are also factors that the credit scoring agencies looks at. While these factors may hurt your credit score, they don’t necessarily eliminate you from loan eligibility. They may also be candidates for improvement. And, these areas may include some falsely reported information. Waiting to try to correct it when you have found the home of your dreams is too late. It is better to start now on the repair and boost process.
Extenuating circumstances like job loss, injury or anything else that prevented you to pay in a timely manner can, and most likely will, be taken into account. Getting this information corrected and reported by the company that made the report to the credit agencies is key, and it takes professionals to assist you with this process.
Nearly 80% of credit reports contain inaccuracies or erroneous accounts. Your credit score is a major factor in any of your large financial investments: credit and loan approval, interest rates, the amount of down payment or mortgage type on your home, your premium on you auto and homeowners insurances, your ability to lease or purchase a vehicle and now it has even become a deciding factor in job qualification! There is no room for error, yet 8 out of 10 people are losing out on their hard earned money because of these mistakes!