How To Increase Credit Scores To Qualify Mortgage


This BLOG On How To Increase Credit Scores To Qualify Mortgage Was UPDATED On February 10th, 2019

There are minimum credit score requirements to qualify for home loans.

  • FHA Loans is the most popular mortgage loan program in the United States
  • To qualify for a 3.5% down payment FHA Home Purchase Loan, borrowers need a minimum of 580 credit scores
  • If the borrower needs non-occupant co-borrowers, the co-borrowers needs to meet the minimum 580 credit score requirements as well
  • Many home buyers with bad credit automatically are under the belief that they need credit repair to qualify for a mortgage
  • This is often not the case
  • Home Buyers with bad credit can qualify for FHA Loans with outstanding collections and charged-off accounts
  • Collections and charged-off accounts do not have to be paid to qualify for FHA Loans
  • Credit Repair is often not needed to qualify for home loans
  • Lenders understand that people have periods of bad credit. However, they want to see re-established credit after a period of bad credit
  • Timely payments in the past 12 months are crucial in getting an approve/eligible per Automated Underwriting System Findings Approval
  • There are many ways on how to increase credit scores to qualify for a mortgage
  • Borrowers with under 580 credit scores can contact us at Gustan Cho Associates and our team of licensed and support personnel can guide them on how to increase credit scores to qualify for mortgage.

How Credit Repair Works

As mentioned earlier, credit repair is most often not required to qualify for mortgage. Many times credit repair can backfire when qualifying for mortgage. Credit Disputes During Mortgage Process is not allowed.

Most folks have heard of credit repair and credit repair companies.

  • Many credit repair companies do have bad reputations
  • The credit repair business is not regulated like the mortgage industry and many can get burned by hiring the wrong credit repair company
  • State Attorney General’s Offices investigate credit repair fraud
  • Credit repair companies do need a bond and business license to operate
  • But do not have to have a special license or certification to be a credit repair specialist

How Do Credit Repair Companies Charge Consumers

There are rules and regulations on how credit repair companies can charge depending on the state:

  • But in general, credit repair companies cannot charge upfront fees on services they have not performed
  • Unfortunately, most credit repair companies ignore this law and charge consumers anyways
  • A credit repair company can charge an initial nominal processing fee
  • But they cannot charge consumers for the services of credit repair in advance
  • Credit repair companies can charge a monthly fee as work is being performed
  • A credit repair company nor any credit consultant can guarantee consumers a specific item will be deleted
  • Credit Repair companies cannot charge for items upfront
  • Credit Consultants cannot charge for items they try to get deleted but were not successful

Can Bankruptcies And Foreclosures Be Deleted Off Credit Report?

I have witnessed bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales be deleted from a person’s credit report.

  • Yes, public records including judgments as well as bankruptcies, foreclosures, deed in lieu of foreclosures, short sales can be removed from a person’s credit report
  • Other derogatory items such as collections, late payments, charge offs, tax liens, and other derogatory items can be deleted through credit repair
  • However, Child Support delinquencies cannot be deleted unless consumers have proof that the child support payments are not in arrears
  • The reason being is because this is a judge’s order and is being reported directly by the courts

Can I Qualify For Mortgage After Deleting My Bankruptcy And Foreclosure From My Credit Report Without The Waiting Period?

As mentioned above, there are cases where consumers can get bankruptcies,foreclosures, deed in lieu of foreclosures, and short sales removed from credit report.

  • I am not a credit repair specialist and do not know the mechanics on how certain credit repair companies can do it
  • However, I have witnessed dozens, if not hundreds of cases where people gotten the following derogatory credit tradelines deleted off credit reports:
    • bankruptcies
    • foreclosures
    • deed in lieu of foreclosure
    • short sales
    • judgments
    • delinquent federal student loans
    • tax liens
  • Unfortunately, having a legitimate bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale removed from credit report does not exempt from the mandatory waiting period after a foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy

How Public Records Deletions Will Get Discovered

Lenders will find out deleted public records when they do a national third party public records search.

  • Any deletions of late payments, collections, repossessions, charged off accounts cannot be discovered by lenders
  • However, any public records that has been deleted off credit reports will get discovered when lenders do third party national public records search through Data Verify or Lexis Nexis

Here are examples of public records:

  • Bankruptcies
  • Foreclosures
  • Deed In Lieu Of Foreclosure
  • Short Sales
  • Tax Liens
  • Judgments
  • Delinquent Federal Student Loans
  • Child Support and/or other court ordered payments

Automated Underwriting System

More than likely, borrowers will get an approve/eligible per DU FINDINGS or LP FINDINGS after deletions of public records because Fannie Mae’s and/or Freddie Mac’s Automated Underwriting System will only go off the items listed on credit report.

The chances are that mortgage lender will also not pick it up until the lender runs a national public records search:

  • However, when borrowers complete mortgage application, there will be a questionnaire where it asks the following:
    • have you filed bankruptcy in the past 10 years
    • have you had a prior foreclosure, deed in lieu of foreclosure, or short sale before
    • do you have any outstanding judgments 
  • Borrowers need to be honest and mark YES on the box
  • If borrower did have a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale tell the truth
  • If applicants check NO and they know that the mortgage lender will not catch the prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, they are committing mortgage fraud
  • These public records will get discovered during mortgage process when lender does a third party national public records search
  • Mortgage fraud is where borrower tries to deceive the lender by lying and/or omitting material information on mortgage application with the intent on getting a mortgage under false pretenses
  • Mortgage Fraud is a felony which is punishable up to 30 years in the Federal Pen
  • No mortgage in the world is worth the consequences of getting investigated, charged, and convicted of mortgage fraud

Two Reasons Why People Go Through Credit Repair

The three major credit bureaus; Transunion, Equifax, and Experian; do make many errors with consumer credit reports.

  • Consumers with proof that a derogatory credit item does not belong to them or the creditor has misreported the information on credit report, federal laws mandate that the credit reporting agencies remove the inaccurate information
  • Consumers with proof, I strongly recommend to mail the three credit reporting agencies and/or creditors via certified mail with a letter and supporting facts
  • Do not dispute derogatory credit items during mortgage process because credit disputes are not allowed

Deleting Accurate Derogatory Information

Many folks with prior bad credit also try to delete accurate derogatory information off their credit report.

  • This method is how most credit repair companies try to attempt to remove derogatory information
  • If the derogatory information contains an error, or errors, such as the wrong amount, the wrong date, duplicates, or other technicalities, then you can attempt to try to remove the derogatory credit item
  • This is done by writing the credit bureaus which is reporting the derogatory information and stating that the item does not belong to you and for them to provide proof that the derogatory item is valid
  • The credit bureaus in turn will contact the reporting creditor and request evidence validating the derogatory item and the creditor has 30 days to do so
  • If the reporting creditor has no proof or if they do not respond to the three credit bureaus, then the credit reporting agencies needs to delete the disputed item

Disputing Items With Credit Balances

Mortgage lenders do not allow pending disputes on any item with an aggregate $1,000 credit balance that is non medical during mortgage process:

  • Borrowers can have open credit disputes with open balances which are medical disputes
  • Borrowers can have credit disputes with zero balance derogatory items and/or collection accounts
  • If borrowers want mortgage application process to proceed, they need to retract the credit dispute
  • Unfortunately, if borrowers retract a credit dispute, this retraction will definitely lower credit scores
  • I recently had a mortgage loan applicant who has a credit dispute that needed to be retracted
  • Her credit scores was at a 586
  • After the credit dispute retraction, her credit scores has dropped to a 525 credit score and she could no longer qualify for mortgage

Fastest Way On How To Increase Credit Scores To Qualify Mortgage

How To Increase Credit Scores To Qualify Mortgage:

Borrowers do not need to hire any expensive credit repair company to qualify for mortgage. There are ways on How To Increase Credit Scores To Qualify Mortgage without hiring a credit repair service. Outstanding collections and charged off accounts do not have to be paid to qualify for FHA Loans. Fastest way on How To Increase Credit Scores To Qualify Mortgage is to have credit card balances paid down below 10% of the credit limit. Borrowers with lower credit scores due to no credit should get three secured credit cards with at least $500 credit limits. This is the fastest way on How To Increase Credit Scores To Qualify Mortgage. Secured credit cards is the fastest and easiest way on how to increase credit scores to qualify mortgage. Borrowers who need to qualify for mortgage with direct lender with no mortgage overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

Gustan Cho

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