Mortgage with bad credit

[credithopeful]

Hello,

I am planning to purchase a house but have not had a pre-approval done yet because I have 2 adverse claims on my credit report that I'd asked for a goodwill adjustment.

One of the creditors denied my request for adjustment, so I'm wondering, since I have this adverse items on my report from 2 years ago, would it help if I also had a letter from the creditor say that the delinquency was brief and that I've been up to date with all my payments since? Can the bank "adjust" my score for the pre-approval if I can provide them with this letter?

[Denita]

Short answer: NO.

What are the adverse items? Are they late payments or collections or judgments? It makes a huge difference.

Also, do you have any idea of what your FICO scores are (the consumer score we are allowed to see)?

[credithopeful]

They are late payments. When I first had a banker run my credit, I remember 3 numbers that came up and the middle number was a little under the qualification. Atthe same time, when we ran it, it was only 1 year after my adverse claims, and also my employment information was not listed. There are the only 2 variables at this point. I don't wantto run it again in fear that so many inquiries will also drive my score down.

[Denita]

Well, late pays are easier to fix than a judgement, for example.
Are you going for an FHA type loan? If so, FHA wants to see no late pays for 2 yrs.
Look at this link for FHA guidelines http://portal.hud.gov/hudportal/docu...5-1_4_secC.pdf

A lender can make the above guidelines "tighter" but not more loose. These are the min guidelines to get the mortgage insured through FHA. So, find out from your lender what mid score they require and what their other requirements are - some lenders are tough (like Chase) and some are much more flexible.

If you want an idea of your scores, you can pull your FICO consumer score at Free FICO Credit Score + Check Your Credit Report Online | myFICO from TU and EQ. EX doesn't sell the FICO score to consumers anymore. Getting your own score will not affect your credit. You might want to do this so you have a basic idea of where you are before the lender pulls it again.

Besides credit, the lender looks at your income and debt to calculate your ratios. Your housing ratio would be what it cost to support the new house (principal, interest, hazard insurance, real estate taxes, PMI, and HOA fees, if any). This is called your front end ratio. The back end ratio is your total debt.

If you have some difficulties in your file, it is best to take care of them before you purchase. But it really sounds like you don't have much negative history, just the two late payments. The lender will probably want an explanation for the late payments.

Remember too, you can overcome some issues by putting down more money. A larger down payment is considered a compensating factor.

[2ndTimeAround]

Originally Posted by Denita

...Remember too, you can overcome some issues by putting down more money. A larger down payment is considered a compensating factor.

Good advice Denita.....

.

[credithopeful]

Thanks Denita,

I went to that website and pulled my credit score, and while it's not great, it's also not as bad as I originally remembered!