FHA Loan Qualifications: Qualifying for an FHA Loan and Your Credit Score
This week I want to talk about how important your credit score is to getting a FHA mortgage.
Your credit and the amount of your debt are very important parts of qualifying for a home mortgage. Let us look at credit first in that without good credit you will not be able to buy a home.
When a credit agency {TRW, Equifax and Trans Union} scores a borrowers credit, they are looking at several different items. First, they look at your history of paying on time. The longer they can go back without seeing any late payments the better your score. They score this area of your credit by monitoring 30, 60, and 90-day delinquencies.
Next, they look at how much debt you have compared to how much credit you have available. The more credit you have available the better, meaning having low balances or no balance with a open credit line will increase your score.
The next thing they look at is do you have any collections or judgements on your record? These items can really have a big impact on lowering your score. Even though lenders view medical collections more lightly than credit reporting agencies, when it comes to your score they hurt your credit the same as any other collection. In most cases, it is required to pay these judgements and collections prior to getting a mortgage and in many cases; time needs to pass in order to get your score back up.
The next area they are going to look at is; do you have any tax liens? In most situations, it is necessary to pay the lien off in order to get an FHA loan.
The last thing they look at are the number of inquires on your record. Even though this area does not affect your credit rating like late payments, collections and judgements or tax liens, every point counts when it comes to getting a mortgage.
Lenders take all this information into account but what their eyes go to first is your middle credit score. This score needs to be above 580 at a minimum for an FHA mortgage and most lenders require it to be above a 620. The higher your score the better your interest rate.
One last thing lenders require is for you to have at least 4 credit lines on your credit report. They will allow for alternative credit in the form of 12 month on time history's of items like utility bills , cell phone or land line bills or proof of insurance payments.
For a free credit report and credit analysis contact me at http://dependablemortgageinc.com.
This week I want to talk about how important your credit score is to getting a FHA mortgage.
Your credit and the amount of your debt are very important parts of qualifying for a home mortgage. Let us look at credit first in that without good credit you will not be able to buy a home.
When a credit agency {TRW, Equifax and Trans Union} scores a borrowers credit, they are looking at several different items. First, they look at your history of paying on time. The longer they can go back without seeing any late payments the better your score. They score this area of your credit by monitoring 30, 60, and 90-day delinquencies.
Next, they look at how much debt you have compared to how much credit you have available. The more credit you have available the better, meaning having low balances or no balance with a open credit line will increase your score.
The next thing they look at is do you have any collections or judgements on your record? These items can really have a big impact on lowering your score. Even though lenders view medical collections more lightly than credit reporting agencies, when it comes to your score they hurt your credit the same as any other collection. In most cases, it is required to pay these judgements and collections prior to getting a mortgage and in many cases; time needs to pass in order to get your score back up.
The next area they are going to look at is; do you have any tax liens? In most situations, it is necessary to pay the lien off in order to get an FHA loan.
The last thing they look at are the number of inquires on your record. Even though this area does not affect your credit rating like late payments, collections and judgements or tax liens, every point counts when it comes to getting a mortgage.
Lenders take all this information into account but what their eyes go to first is your middle credit score. This score needs to be above 580 at a minimum for an FHA mortgage and most lenders require it to be above a 620. The higher your score the better your interest rate.
One last thing lenders require is for you to have at least 4 credit lines on your credit report. They will allow for alternative credit in the form of 12 month on time history's of items like utility bills , cell phone or land line bills or proof of insurance payments.
For a free credit report and credit analysis contact me at http://dependablemortgageinc.com.