Buying a home is an American dream that can sometimes be difficult for those who have credit scores that are less than ideal. However, the Federal Housing Administration can make those dream turn into reality by providing insurance on mortgages that are issued by lenders to those who have less than favorable credit scores. Even so, there are down payment requirements that do need to be met in order to obtain an FHA mortgage.
For people with a credit score of 580 or higher, only a 3.5% down payment is required. For scores between 500 to 579, a down payment of 10% is required. Therefore, if your credit score falls in between 500 and 579 and you don't have 10% of the sale price of a house to put down, you'll need to work hard to improve your credit score or find a way to come up with the rest of the required down payment. Here's some helpful advice.
Repair Any Disputes On Your Credit Report
One thing that is vital for you to do is to check through your credit report to find if there are any discrepancies and inaccuracies that can be resolved, which can help improve your credit score and, possibly, help you achieve that magic number of 580. To do this, you can consult with a credit repair agency or submit claims yourself to resolve any disputes you have with creditors.
Catch Up On Your Payments
The next thing to do is to catch up on all your payments, particularly any that have gone into collections. Use your credit report to locate the derogatory marks and concentrate on them first if you have limited finances to take care of everything. While paying the derogatory accounts off won't make them disappear from your credit report, they will change to show that you no longer owe the accounts money.
Get a Secured Credit Card
In order to get approved for an FHA mortgage, you will need to have two established credit accounts that have always been in good standing, which can also help improve your credit score. Credit accounts include auto loans, personal loans, and credit cards. One way to achieve this is to obtain a secured credit card and use it while being sure to make timely monthly payments on it.
In conclusion, speak with an FHA mortgage lending service for more guidance on how to improve your credit score so you can pay a lower down payment when you are ready to obtain an FHA mortgage. For more information, contact a company like NRL Mortgage LLC.Share