I want to buy a house but my credit sucks?

Question

I want to buy a house but right now my fico is 507 so it sucks, what do I need to do to be able to buy a house? This would be my first house.

I dont plan on buying for at least a year from now. I know I have to clean up my credit but I dont know how. Thanks for the good suggestions.

Answer 1

thank you for including your fico score in with your quesition, very important.

I hate to tell you this but unless you are putting atleast 20% down your chances of either getting the loan or not being charged like 10% interest, which could put you at a high debt to income ratio, which could disqualify you for the loan in the first place.

Let me be honest with you unless you have 20% down they are probably not going to approve you, cause a 507 is pretty low, anybpdy with less than a 620 is considered risky, a 450 is like "no good credit to speak of"

if i were you, i would take out like a small personal loan at a bank or credit union like a 500 dollar loan and then make monthly payments and then pay it in FULL six months later, Get two credit cards, they might have to secured, in which most banks and credit unions offer, ask at your bank, most you can get for as little as $500 secured, make purchases with them every month, DO Not REACH YOUR LIMIT WITH THEM though, and pay them in full every month, Do that and check your credit again in like nine months, i bet it will be atleast 50 points higher.

also avoid inquiries on your credit, each one knocks you like 5 points.

Answer 2

Simple. Don't buy a house now! Keep renting and clean up your credit. Rents are not based on your credit rating but mortgage payments damn sure are! You could wind up paying twice as much every month as someone with solid credit. That will only leave you in more dire circumstances than you are right now. Why would you want to screw yourself with extremely high mortgage payments and risk losing your home over the desire just to own a home? That does not make financial sense at all.

Clean your credit up. Pay your bills on time and save towards a down payment and closing costs. In a few years you can bring your credit score up by 150 - 200 points and then you'll qualify for rates that will make sense.

While there are some loan programs that don't base your rate on your credit score -- the FHA is one -- you still must meet basic credit worthiness criteria and be able to afford the payments. If you're in the crapper credit-wise now -- and a 507 score is deeply in the crapper -- you need to focus on cleaning that up first before you take the leap into home owership. You CAN do it, but you just should not be doing it right now!

Answer 3

Credit Sucks

Answer 4

Fix your credit. Get a copy of the report (free), see what is wrong and fix it.

If you have judgements, etc PAY THEM OFF. You will never get a loan with outstanding judgements.

Good news. You can still get a mortgage with your credit score. But you will need a down payment of at least 10% and the interest rate will by high.

But you can refin in a year or so and lower the payment.

The other area to look at is FHA. Take with a lender.

BUT FIX THE CREDIT. AND KEEP IT CLEAN! It amazes me of the number of people in the chat area that don't believe a good credit report is important.

Even if you don't have a lot of money, it's NO REASON to have back credit. Pay on time is the most important thing.

Answer 5

Here is a few tips to help prepare yourself (and possibly repair your credit) in order to buy that home of your dreams:

- You should always retain all bank statements and pay stubs
- If you're renting, make your rental payments with a check, consistently, and keep a copy of the cancelled checks
- Put as many utilities in your name and, of course, make sure they are paid on time. On time is defined as a payment no more than 15 days past the due date
- Use a credit card to make purchases normally made during the month such as the purchase of gas, food, haircuts, etc.
- Try to reduce the number of inquiries made into your credit
- Increase the credit limit on your credit cards without using the additional amount. The lower the balance to credit limit ratio is, can improve your credit score.
- If possible, do not make any major purchases just prior to buying a home, this can negatively effect your debt ratio
- If you are receiving a gift for down payment and associated costs of closing a loan for a home, make sure that gift comes from a blood relative's account and make sure the money is placed in the borrowers account 60 prior to loan application.

If you are looking to purchase, NOW really is a good time to take the plunge! I hope these tips help!

Good luck with your real estate pursuits. If you need any assistance, please do not hesitate to contact me.

Answer 6

First, make sure you pay your rent by check so that you can show 12 months (or more) of consistent payments when you go to apply next year.

Here is a great resource to help you in your recovery:
The Bankruptcy Mortgage Book. It isn't just for people that have had a bankruptcy, but walks you through how to get copies of your credit report, and write letters (includes sample letters), as well as what the underwriters look for and how to prepare in the months prior to applying for a home mortgage.

Answer 7

What you need to do is bring your credit score up to an acceptable level - pay off outstanding bills, and be sure to make all payments on time.

Answer 8

You originally stated that your credit sucks.There still may be some programs that you can qualify for. One is FHA, FHA has no minimum credit score. You can email me at [e-mail] I can answer questions you might have and help you to your goal of home ownership.

Answer 9

You need a down payment of at least 25%. That is about as low as your credit can possibly be.