My friend has a credit score of 350 and has 13 collection accounts on her credit report totaling around $15,000 and she wants to buy a house will she be able to get finance?
2006-09-21 13:27:43 · 4 answers · asked by Anonymous in Business & Finance ➔ Credit
I used to be a loan counselor and never encountered such a low credit score. I don't mean to sound mean... The chances of her being financed through a creditor that even specializes in people with bad credit are extremely low. Her chances are better if she puts an extremely large down payment that way the creditor knows that if she goes into default in loan payments they can foreclose the home and not lose too much money in it. If she had a downpayment that large, I would suggest she pay off her collections first. It'll be a while until her credit score will rise to a reasonable amount, but paid collections look much better than unpaid collections. Most creditors ignore paid collections, but do look at whether to potential customer has defaulted or been late on payments within the last two years. I'd say before she finances a home, she needs to pay off her collections, then between a few months and 2 years later she could finance a home for a high interest rate and possibly a nice down payment.
Be sure to let her know that it is also bad for her credit if she is constantly applying to different companies for loans, credit cards or any financing. Once she starts paying off her collections, tell her that she needs to avoid applying for anything for at least 6 months. If you have an excessive amount of inquiries into your credit (over 6 in 6 months can be seen as excessive by many financing companies) your credit score will lower.
2006-09-21 13:39:09 · answer #1 · answered by Vicky 2 · 0⤊ 0⤋
She has a very low credit score, most credit agencies rate from 400-925 with925 being the highest, with most people falling in the 700 range. I take it that all her credit so far is in credit cards? Honestly it is unlikely, but if you find someone they will charge an extremely high finance charge for the first 2 years, and then she can re-do her terms. Has she thought of, what is something goes wrong water damage, termites, electrical problems, does she have the cash flow, owing 15,000, I would pay at least half of that before seriously buying a home...the American Dream is nice, but in the process, you do not want to loose everything. Right??
2006-09-21 20:42:57 · answer #2 · answered by Jamaison D 3 · 0⤊ 0⤋
No chance....that is at the very bottom of the credit spectrum. And even if she could somehow secure financing, it would at an astronomical rate. Something from a private investor or loan shark at a rate of 20%-30%, but it's really not worth paying that much.
It'd be wise to start settling those collections and getting her credit back up to reasonable levels. That is alarmingly low! Definitely do not apply for any new credit. Simply work on the outstanding credit and the scores will gradually rise. Patience is the key here.
2006-09-21 20:30:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
with a giant amount down
2006-09-21 20:30:08 · answer #4 · answered by bayareart1 6 · 0⤊ 0⤋