How Can I Improve My Credit Scores To Qualify For Mortgage?

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How Can I Improve My Credit Scores To Qualify For Mortgage

This BLOG On Advice On How Can I Improve My Credit Scores To Qualify For Mortgage Was UPDATED On November 19th, 2018

Many consumers ask how can I improve my credit scores to qualify for mortgage?

  • There a minimum credit score requirements to qualify for mortgages
  • Each loan program has their own credit score requirements

Here are the required credit score requirements for the following mortgage loan programs:

  • HUD requires a minimum of 580 FICO credit score to qualify for a 3.5% down payment home purchase FHA Loans
  • Borrowers can qualify for FHA Loans with credit scores between 500 and 579 with 10% down payment
  • VA does not have a minimum credit score requirements
  • Lenders who requires a minimum of 580 to 640 FICO to qualify on both VA home purchase and refinance loans is requiring minimum credit scores because of their own lender overlays
  • USDA requires a minimum of 580 credit scores to qualify
  • Minimum Credit Scores for FHA 203k Loans is 620 FICO
  • Minimum Credit Scores required for Jumbo Mortgages is 500 with our NON-QM Jumbo Loan Programs at Gustan Cho Associates at Loan Cabin Inc.
  • Minimum Credit Scores required for 5 to 10 Fannie Mae Financed Properties is 720

Affects Of Credit Scores In Qualifying For Mortgages

Low credit scores means higher mortgage interest rates:

  • This means it costs borrowers more money when it comes time for them to secure a mortgage
  • Lenders penalize borrowers with low credit scores
  • This is because lower credit scores means higher risk borrowers
  • Many times, it is worthwhile to wait until the applicant have repaired their credit scores before applying for a mortgage
  • Borrowers should always work with a mortgage brokers and/or bankers who they feel comfortable with and someone who will act on their best interest
  • A mortgage broker should give borrowers various options that would be most beneficial for them
  • I, for example, advise my clients that they can qualify for a lower interest rate if they can get their scores up, if that is the case
  • Ways on how I can improve my credit scores to qualify for mortgage may be just by paying down their credit cards
  • Gustan Cho Associates Mortgage Group assists folks in assisting them boost their credit scores
  • Borrowers who just got their credit scores plummet due to a recent bankruptcy or foreclosure should start repairing and reestablishing their credit as soon as possible

Credit Scoring Models

Credit scoring models are complex and often vary among creditors and for different types of credit.

  • If one factor changes, one’s credit score may change
  • Improvements of credit scores usually is dependent upon one factor or another taken into the credit scoring model formula by each credit bureau
  • Only the credit bureau can explain what might improve a consumer’s credit score under the particular model used

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

Here are some factors on how I can improve my credit scores to qualify for mortgage:

  • Paying bills on time
  • Overall payment history of consumers is an important factor in the credit scoring model
  • Late payments will negatively impact borrower’s credit scores
  • Collections accounts, charge offs, and late payments will drop consumer credit scores
  • However, scores will improve as the derogatory credit tradeline ages
  • Large balances on revolving accounts will negatively impact consumer scores
  • Higher balances will hurt consumers
  • Paying down revolving accounts will greatly boost scores
  • Longevity of credit history with a creditor shows strength and stability
  • Lack of credit will hurt consumers
  • Multiple inquiries is not good:
    • Hurt consumers
    • Lenders view multiple inquiries as not favorable
  • The amount, age, and type of accounts consumers have determines their scores

Borrowers with any questions, please contact us at Gustan Cho Associates.

There is no obligation or cost involved. Even if consuemrs just filed bankruptcy and are not ready to buy a home until a later date, contact us. Lets work together in rebuilding your credit.  Consumers with low credit scores and want to prepare to qualify for a mortgage click APPLY NOW FOR PRE-APPROVAL or call us at 262-716-8151 or text for faster response. We are available 7 days a week. You can email us at gcho@gustancho.com.

 Gustan L. Cho NMLS ID 873293

This BLOG On How Can I Improve My Credit Scores To Qualify For Mortgage was updated on March 16, 2017 by Gustan Cho NMLS 873293 of Nationwide Mortgage & Realty LLC.

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