There is more to credit than just the score when it comes to getting approved for a home loan. Just because your credit score is under 620 and you are labeled “Fair” to “Very Poor” credit doesn’t mean you cannot get approved for a home loan.
Example 1: You have a 740 credit score “Very Good Credit”, but you just filed for a Chapter 13 Bankruptcy and you have been over 30 days late on your rent in the past 12 months. Yes, your credit score is “Very Good” but you will not qualify for an FHA, VA or Conventional loan.
Example 2: You have a 585 credit score “Very Poor” to “Fair”, but you have 2 years on-time rent history or living with family, no late payments on credit for the past 12 months and some medical collections from 3 years ago. You can qualify for a home loan!
Credit is more than just a score and just because you are labeled “Fair” or “Very Poor” doesn’t mean you cannot buy, refinance or cash-out refinance a home. You need to work with a mortgage company that follows the investor guidelines and doesn’t have credit score overlays.
- VA Loan Low Credit Score ZERO DOWN LOAN 500 Minimum Credit
- FHA Loan Low Credit Score 500 Minimum Credit Score
- Conforming Loans with a 1% Down Payment
- NO Overlay Lender
***All other factors being equal, a higher credit score generally means you’ll pay lower interest rates, fees, and deposits. Over the lifetime of a loan, even a small reduction in rate can save you thousands of dollars in interest, so it pays to have a high credit score.
*** Experian Fico Score source 08.17.19 https://www.experian.com/blogs/ask-experian/infographic-what-are-the-different-scoring-ranges/