This Article Is About How To Prepare And Qualify For Home Loan After Credit Repair
Mortgage loan applicants with really bad credit can qualify for a home loan after credit repair.
There are mortgage lending guidelines with regards to prior bad credit such as the following:
- prior bankruptcy
- deed in lieu of foreclosure
- short sale
- unpaid collection accounts
- charge offs
- tax liens
- late payments
- other derogatory credit items
Meeting The Minimum Credit Score Requirements
There are also minimum credit score requirements to qualify for a home loan:
- Minimum credit score requirements depend on the mortgage loan program
- For example, to qualify for a 3.5% down payment FHA home loan, minimum credit scores required are 580
- To qualify for either a 3% down payment or 5% down payment conventional loan, the minimum credit scores required is 620
- To qualify for traditional Jumbo Mortgages, minimum credit scores required is 700
- There are some Jumbo Mortgage Lenders who will accept Jumbo Mortgage Applicants with credit scores under 700
Gustan Cho Associates offers Non-QM Jumbo Mortgages with credit scores down to 620.
Does Credit Repair Work?
Credit repair does work.
- There are many credit repair consultants that can do wonders
- Many credit repair companies can remove practically anything off someone’s credit report
- These credit consultants know the ins and outs of the laws governing the Fair Credit Reporting Act
- They know the loopholes in the credit reporting system
- Often times can even remove derogatory credit items that are correct
- Derogatory credit items such as unpaid collection accounts, charge offs, and late payments can be deleted off the credit report
- Public records such as judgments, tax liens, child support and alimony, bankruptcies, foreclosures, short sales, deed in lieu of foreclosures can also be removed one’s credit report as well
However, there may be issues with getting a home loan after credit repair with derogatory items removed from public records which we will discuss later.
Home Loan After Credit Repair: Which Credit Repair Company Do I Choose?
There are thousands, if not tens of thousands credit repair companies in the United States.
- Which credit repair company do home buyers with bad credit choose?
- When researching online consumers will see a bunch of fancy credit repair website all claiming to be experts with testimonials on how great they are
- Whatever a credit repair company does, consumers can do it themselves
- Consumers can repair credit on their own
However, many folks do not have the time to do research on credit repair nor the time to tackle this task since they work full-time jobs.
Hiring Credit Repair Is Not Necessary To Qualify For A Mortgage
Like many other industries, there are reputable credit repair companies:
- Credit repair companies that are incompetent as well as scammers just trying to get a monthly fee from consumers every month with little or no work being done
- The best way of going about choosing the right credit repair company is not just going on the internet and finding the best sounding credit repair website but to ask for referrals from friends, business colleagues, realtors, mortgage brokers, accountants, attorneys, or other professionals
- Many folks who were not happy with credit repair or any other services will not refer them
- Many folks who had luck with repairing their credit will gladly refer them
- I know of many credit repair consultants who do Magic and a great job at a reasonable cost who does not even have a website nor an office and work from home
There are many credit repair companies with fancy websites who spend thousands of dollars on advertising and are incompetent and do not know what they are doing.
Is Credit Repair Recommended To Qualify For Home Loan After Credit Repair?
If credit scores are below 580 and have tons of old derogatory items and unpaid collection accounts, then the answer is yes that qualifying for a home loan after credit repair is recommended.
- Deletions of charge off, unpaid collection accounts, and late payments will do wonders to credit profile and credit scores
- However, public records such as bankruptcies, foreclosures, tax liens, child support payments, and judgments may help credit scores and credit profile but the lender will find out about it and may address the derogatory credit items
- Even though bankruptcy, foreclosure, deed in lieu of foreclosure, tax liens, and judgments may be deleted off a credit report, lenders will find out about public records that have been deleted
- This is because all lenders do a national third party public records search
- Bankruptcies and Foreclosures will definitely be discovered
- Tax liens and judgments will also get discovered
- When applying for a mortgage application, there will be a disclosure sheet where it asks whether or not you have filed bankruptcy and foreclosure
If you did in fact filed bankruptcy or had a foreclosure and you mark NO because it is deleted off a credit report, you need to think twice because by doing so you are committing mortgage fraud.
Credit Repair And Re-Establishing Credit
If you are going to apply for a home loan after credit repair, just deleting off derogatory items off credit reports is not enough. You also need to re-establish your credit by adding new credit to your credit report and make sure you pay them on time. One 30 days late payment will drop your credit scores by at least 50 plus points. The fastest and easiest way of rebuilding your credit is by getting 3 to 5 secured credit cards with at least a $500 credit limit on each secured credit card.