Thank you for your email. My first suggestion is clean up your credit rating and become more financially responsible. It will help our entire Nation
Currently some lenders will lend to people with 620 credit score and above to buy a home. On the street the news is Wells Fargo is doing to 580 but this is not confirmed.
Lending to people who really can’t afford homes is one of the main reason why we are in this housing financial mess. FHA loans looks to be the new dumping ground for sub prime loans which is scary. FHA is a governmental agency so we the taxpayers would have to bail the lender out when they fail to pay their mortgage
We need to get the economy moving so we have to relax standards, but at the same time we might be shooting our economy in the foot for a second round by lending to people who will default and having taxpayers bail them out.
Some of the best ways to clean up your credit score to buy a home are:
- Always pay your bills on time – Late payments play a large role in driving down your score.
- Live in your means – If you have past-due bills now, get current and stay that way.
- If you can’t pay on time – Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.
- If your situation is serious you might need outside help – See a legitimate, non profit credit counselor. Avoid the scam artists who promise a quick reversal of your credit problems.
- Keep your credit card balances low- High debt-to-credit-limit ratios drive your scores down.
- Pay off debt, don’t move it around – Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
- Don’t close unused accounts – because zero balance might help your score.
- Don’t open new accounts that you don’t need as a quickie approach to altering your debt-to-credit-limit ratios. – That can lower your score.
- Time – Is the only thing that can improve this aspect of your scores, but you can manage it wisely
- Don’t open several new accounts in a short period – Especially if your credit history is fewer than three years. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly.
- Several credit inquiries during a short period means you are attempting to open multiple new accounts, and that lowers your credit scores.
- Credit scoring software usually recognizes when you are shopping for a single loan within a short period of time, such as a home loan. If multiple inquiries are necessary, have them pulled as closely together as possible.
- Checking your own credit report does not affect your scores.
- Do try to open a few new accounts - If you’ve had credit problems in the past. Pay them on time and don’t max out your credit limits.
- A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.
- Having many installment loans can lower your scores since payments remain the same until balances are paid in full.
- Don’t open new accounts just to have several accounts or to attempt a better mix of credit.
- Closing an account doesn’t remove it from your report. It may still be considered for scoring purposes