lowest score possible

[mzjazzyazz]

what is the lowest score that you have heard of getting approved for a mortgage loan?

[songbirdnc]

A borrower needs at least a 500, and that is going to be a sub-prime loan as well as anywhere from 5% to 20% downpayment, and it will be a high interest rate, this is not going to be the most attractive offer for you, but then again this is not the most attractive risk for the bank either, however; there are many factors that come into play when applying for a mortgage loan. The absolute BEST thing to do is find a lender that will sit down with you and go through your credit report and give you advice of what you need to do to get a mortgage loan. An experienced loan officer will know from looking at your mortgage application what direction to go in. Here is the "formula" that you need to know about:

credit score of 500 to 580 is going to be the worst scenario in terms of rate, and money down.

credit score of 580 to 620 can get you into an FHA loan with only 3% down and the rate will be a little better than a subprime loan.

Credit score of 620 to 680 is what you need for a conventional loan and this is the area you want to be in to get the best rate.

Credit score of 680 or higher, you are considered A credit. golden

Credit scores are only ONE factor in getting a loan. Income, Assets, Liabilities, and Employment are the other ones that are under the microscope. The main thing is risk. A lender has to look at this as a win-win situation and if it does not add up then it doesn't. You may not be able to get a loan right now, but one day you will providing you strive to accomplish the things you need to do based on your personal credit history, and the other factors stated above.

I hope this helps in your learning process so that one day you will own your own the home of your dreams.

Mortgage Consultant

[amortgageman]

I suppose "no score" would be the lowest possible to get a mortgage approval.

From my personal experience though, 416 is the lowest approval I have done. There were 27 tradelines were reporting incorrectly on the bureaus, and all the documentation was there to prove that the accounts were paid. There were 62 letters of dispute sent out in the initial batch to the three credit bureaus (after the mortgage was closed).

Proud to say that the applicant received a 5.75%, 30 year fixed rate, no prepay penalties, full 100% financing, all closing costs paid, including prepaids.

Everything fell into place, and the original package submitted to the lender was 106 pages in length.

[songbirdnc]

Who is the lender that would lend with that kind of score? whoever they are I suggest they market heavily b/c that type of scenario is absolutely unheard of? I have not heard of a lender approving with a score that low.

I have gotten an approval for a borrower with a 500 score, self-employed, stated income, rate of 5.50% but his income was exceptional, and his downpayment was also exceptional, stable employment history, etc........

Your post makes it sound like anyone with bad credit can get any loan they want, and underwriting guidelines are basically not a concern?

Not trying to be conflicting here, but I think for all intensive purposes in this forum, unless ppl reading these posts also know and understand what IS required by an underwriter I think projecting such simplicity from the example you gave is not the norm nor is it realistic for most ppl. It is absolutely a case by case basis, but mortgage lending guidelines are adhered to and there is no way around them. Not everyone with a no score or a 416 score is going to get approved for a mortgage loan, at least not with Fannie Mae or Freddie Mac, or even a govt loan (FHA) in fact the chances of it are quite rare indeed. I am sure your borrower had a lot more going for him than you are taking the time to tell. All I am wanting to stress here is that is not a typical situation and I would not want ppl reading this to think it is that simple and that any score will work, b/c that is just not the case.

There are private mortgage lenders out there and perhaps a private investor will lend to someone with that low a score. Private investors do not conform to Fannie Mae or Freddie Mac guidelines.

[mzjazzyazz]

Last night I checked my scores.......TU 540, EX 537, EQ 520. DH scores were TU 617, ex 607, eq 572. I don't know if we have a chance or not. I have disputing some things to see what comes back but it has only been a couple of days.

My SIL told me that her husband had no credit and she added his name to her Shell card that had never been late and his scores shot up. I was thinking about doing the same thing. Has anyone ever heard of this.

They are both employed, but since his credit was in the 700's, they got approved for a no doc loan. What do your scores have to be in order to get a no doc loan?

[mzjazzyazz]

And the thing is, we don't have a down payment either. So I think that is another shot against us.

[amortgageman]

1) Read the original question.

2) Now, go to the FHA lending guide and read up and come back and tell us what score is required to qualify for an FHA loan.

3) Next go to the VA lending guide and read up and come back and tell us what score is required to qualify for a VA loan.

4) Re read what I posted. Twenty seven incorrect accounts reported on the credit bureau, full documentation to the FHA underwriter that these accounts were indeed paid. Everything fell into place.

Thank you for your valued input, and yes, anybody with a 416 credit score would be able to qualify given that all collections, chargeoffs, and judgments are paid or acceptable payment arrangements have been made, and the borrower has sufficient employment history, fit the income guidelines to qualify, and have four credit resources which may or may not be includedin the credit report.

Any other questions?

P.S. To elloquently quote your signature line: You miss 100% of the shots you don't take.

[amortgageman]

Meldisha,

Which of the two of you are the primary wage earner? DH's credit scores are adequate to get decent non prime financing, if he is the primary wage earner.

Can you share a little bit more about income, total monthly debt obligations, approximate dollar amount of the home you would be wanting to purchase?

Employment history is another factor, most lenders want 2 years steady income, or an explanation of any "gaps" in employment.

Next up, is regarding what types of collections, judgments, or chargeoffs are on your credit reports? Paid ones are O.K. Any within the past twelve months? Tax liens or child support issues?

Finally, regarding your credit history, we need to know about "How are you paying rent now?" If from a private party, do you have cancelled checks? Have you been on time for the past twelve months? Do you have good paying accounts on your other credit accounts. Bonus information: Active account over $5,000, and 24 month payment history? Other less important accounts open at least six months?

That should give a start to things.

[Ravenous Wolf]

Credit scores are only ONE factor in getting a loan. Income, Assets, Liabilities, and Employment are the other ones that are under the microscope. The main thing is risk.

I am not too sure that being “put under the microscope” is valid any more because the credit and documentation practices have greatly eased.

If a mortgager does put you under the microscope, I would go somewhere else.

Today, lots of mortgagers go to great pains “not” to ask a lot of questions and a number of items that did have great scrutiny in the past have been swept under the rug.

I know that was not the case years ago especially before the underwriting process was automated. When I started working for one of the largest mortgage servicers, it still took a mountain of paperwork to get a mortgage wrapped up.

Today, I and a number of my friends were really surprised on how easy it was to get a house.

I was only at my current job for a few weeks when I was pre-qualified for my mortgage. When I went to my mortgager, they only asked if I my job was in the same field for like ten years. Naturally, I said yes but I could have been a circus clown but the only thing they asked was for my previous years tax statements.

They asked no questions about my “mailing” address (which was my private mailbox) and my residential address other than wanting to see the lease of my apartment.

Some of my debt was hidden and they really made no attempt to directly ask me if I had more debt that what was on my credit reports.

They were also “lax” about my “gift” money that I was going to use for my closing costs and they asked no questions on how it “suddenly” popped up. They even told me that it was easier to declare it as “gift” money instead of “mattress” money and handed me a form to give to any relative to fill out.

After all was said and done with, I still ended up with a 5.85 percent mortgage.

[coolbreeze]

A borrower needs at least a 500, and that is going to be a sub-prime loan as well as anywhere from 5% to 20% downpayment, and it will be a high interest rate, this is not going to be the most attractive offer for you, but then again this is not the most attractive risk for the bank either, however; there are many factors that come into play when applying for a mortgage loan. The absolute BEST thing to do is find a lender that will sit down with you and go through your credit report and give you advice of what you need to do to get a mortgage loan. An experienced loan officer will know from looking at your mortgage application what direction to go in. Here is the "formula" that you need to know about:

credit score of 500 to 580 is going to be the worst scenario in terms of rate, and money down.

credit score of 580 to 620 can get you into an FHA loan with only 3% down and the rate will be a little better than a subprime loan.

If someone were to fall within this category but have no assets and no savings, can they still get a mortgage?

Credit score of 620 to 680 is what you need for a conventional loan and this is the area you want to be in to get the best rate.

Credit score of 680 or higher, you are considered A credit. golden

Credit scores are only ONE factor in getting a loan. Income, Assets, Liabilities, and Employment are the other ones that are under the microscope. The main thing is risk. A lender has to look at this as a win-win situation and if it does not add up then it doesn't. You may not be able to get a loan right now, but one day you will providing you strive to accomplish the things you need to do based on your personal credit history, and the other factors stated above.

I hope this helps in your learning process so that one day you will own your own the home of your dreams.

Mortgage Consultant

[coolbreeze]

Let me try this again -

credit score of 580 to 620 can get you into an FHA loan with only 3% down and the rate will be a little better than a subprime loan.

If someone were to fall within this category but have no assets and no savings, can they still get a mortgage?

[cbarden]

Absolutely

[songbirdnc]

credit score of 580 to 620 can get you into an FHA loan with only 3% down and the rate will be a little better than a subprime loan.

If someone were to fall within this category but have no assets and no savings, can they still get a mortgage?

Yes, use gift funds or home buyers assistance program.

[mzjazzyazz]

Let a lender pull my credit today just to see where I am at. She told me that my lowest score was 479 and another was was 527. ( See how much myfico.com knows! grrrrrrrrrrr) And DH scores were 607 and 611. She said his scores are fine, but since I make the most income, that my credit scores need to be higher.

I had a BK dc in 2002. Since then, I have had collection accounts, which out of 8 of them 3 remain unpaid. And I have been late on my car note few times. The only monthly obligations are both of our car notes, which total $900, and a student loan which is deferred right now. My gross income monthly income is $7500. DH has no credit cards and neither do I. The one that I did have I let it go and now it too is in collections. (im turning over a new leaf next year...lol)

Right now we live an apartment complex and always pay our rent on time. But other than that.......things dont look to good.

The lender also told me that I need to get a few credit cards so I can re-establish my credit, but who in the world will give me a card with all of that crap on my report.

[DocDon]

Have you looked into secured cards that report?

[mzjazzyazz]

nope. I don't know who would approve me for a secured card and I just don't want to be applying at all these different places and having them run my credit. any suggestions?

[cbarden]

1) Read the original question.

2) Now, go to the FHA lending guide and read up and come back and tell us what score is required to qualify for an FHA loan.

>> FHA Lending guidelines state that you must have a 585 mid score to qualify or 4 valid lines that you are paying on and can prove that have been current for 12 mos or more. Trades would include Insurance, Rent, Power Bills, Cable Bills or any other liabilty that does not show up on your current credit report.

3) Next go to the VA lending guide and read up and come back and tell us what score is

required to qualify for a VA loan.

>> VA Lending guide allows for 0 Credit, however 4 valid tradelines just like #2 above.

4) Re read what I posted. Twenty seven incorrect accounts reported on the credit bureau, full documentation to the FHA underwriter that these accounts were indeed paid. Everything fell into place.

>> I find it hard to believe that all 27 accnts were incorrect especially if you provided full documentation to the UW that all of them were paid. Something smells fishy. It would also seem logical to me that considering Credit Scores are based on algorithms and can for all intents and purposes predict the future. With that being said why would FHA or VA approve a loan if your borrower had severely insufficient credit to do so. This doesn't make good business sense from a risk point of view. In other words, if your credit score is low it's probably because you haven't paid your bills. If it's a 416 mid then you have either A) had a very rough time or never paid a bill and made good on your promises in your life. I would have never taken this case on for fear I wouldn't be able to sleep at night knowing full well that this loan would one day soon end up in foreclosure and have MY clients end up on the street. I would have shown them a nice apartment and done credit counseling with them. Very Bad Move.

Charles Barden

[DocDon]

nope. I don't know who would approve me for a secured card and I just don't want to be applying at all these different places and having them run my credit. any suggestions?

Do a search on National City. From what's been posted they have a good secured card program. I don't recall the details on pulling, scoring criteria, etc...

[songbirdnc]

1) Read the original question.

2) Now, go to the FHA lending guide and read up and come back and tell us what score is required to qualify for an FHA loan.

3) Next go to the VA lending guide and read up and come back and tell us what score is required to qualify for a VA loan.

4) Re read what I posted. Twenty seven incorrect accounts reported on the credit bureau, full documentation to the FHA underwriter that these accounts were indeed paid. Everything fell into place.

Thank you for your valued input, and yes, anybody with a 416 credit score would be able to qualify given that all collections, chargeoffs, and judgments are paid or acceptable payment arrangements have been made, and the borrower has sufficient employment history, fit the income guidelines to qualify, and have four credit resources which may or may not be includedin the credit report.

Any other questions?

P.S. To elloquently quote your signature line: You miss 100% of the shots you don't take.[/quote

In response to your sarcasm which I find to be immature and unproductive

FHA Guidelines: Minimum Credit Score 585 Loans below 585 will be manually underwritten. Basically an underwriter is looking at the measurement of risk, and if a borrower has a score lower than what the "guidelines" suggest then the loan is being considered under the highest risk assessment. It is not that it is entirely impossible to get a mortgage outside of the lending guidelines it has more to do with the fact that the earlier post made it sound as if any situation can be approved, nor was all the information about the borrower disclosed in the original post. The bottom line is mortgage lending is a case by case basis, it is not cookie cutter mentality, it is circumstancial based on various factors.

I suggest you think about actually trying to help others here with your mortgage knowledge instead of trying to be in competition with me given the fact that I decided to post some advice based on my own mortgage experience as a loan officer. I am not interested in these types of sarcastic he said she said postings. Just help people and leave your punch shots out of it, I think that would be more productive to others reading these posts, don't you think?

[DocDon]

More in-fighting between mortgage people?

Again?

Knock it off.

[mzjazzyazz]

DOCDON, i searced National City, but didnt come up with anything about secured cards. If you have time can you give me link.

thanks

[songbirdnc]

More in-fighting between mortgage people?

Again?

Knock it off.

I appreciate your comments because today is my first postings here and I got slammed by some guy (amortgageman) I am very new to this site, just registered over the weekend and thought what a great resource, so I make a post and am thinking I am actually helping others and out of no where comes sarcasm and ego towards my posting? I replied to his sarcasm b/c we are on here to help, not as in competition.

Thanks for the support.

[amortgageman]

FHA Guidelines: Minimum Credit Score 585 Loans below 585 will be manually underwritten.

Thank you very much.

Trades would include Insurance, Rent, Power Bills, Cable Bills or any other liabilty that does not show up on your current credit report.

Thank you too!

>> I find it hard to believe that all 27 accnts were incorrect especially if you provided full documentation to the UW that all of them were paid. Something smells fishy. It would also seem logical to me that considering Credit Scores are based on algorithms and can for all intents and purposes predict the future. With that being said why would FHA or VA approve a loan if your borrower had severely insufficient credit to do so. This doesn't make good business sense from a risk point of view. In other words, if your credit score is low it's probably because you haven't paid your bills. If it's a 416 mid then you have either A) had a very rough time or never paid a bill and made good on your promises in your life.

I choose A.

Actually the client only had one reported tradeline in his entire life. He (actually his wife) also had two premature babies that racked up $92,000 in medical bills, for which he filed Chapter 7 bankruptcy (all medical).

All 27 of the collections were a result of medical collections, from two children's hospitals and doctors in two separate cities. Some of the collections sold after the bankruptcy to other creditors.

I would have never taken this case on for fear I wouldn't be able to sleep at night knowing full well that this loan would one day soon end up in foreclosure and have MY clients end up on the street. I would have shown them a nice apartment and done credit counseling with them.

WOW, NO Comment, Just WOW!

Very Bad Move.

This may be one of the best loans ever underwritten. So what the guy never used credit, he had a perfect rental history, all utilities paid on time, (cable, cell phone, gas utilities, electricity, water, and home phone). That was seven tradelines altogether, which was more than adequate to meet the four tradeline requirement. Outside of the medical expenses, the guy had hardly used credit and had some unfortunate circumstances, hence, the 416 credit score.

I suggest you think about actually trying to help others here with your mortgage knowledge instead of trying to be in competition with me given the fact that I decided to post some advice based on my own mortgage experience as a loan officer. I am not interested in these types of sarcastic he said she said postings. Just help people and leave your punch shots out of it, I think that would be more productive to others reading these posts, don't you think?

Reread the thread again, and shame on you for implying such negativity

Doc Don and Ravenous Wolf,

Here enjoy!

[coolbreeze]

credit score of 580 to 620 can get you into an FHA loan with only 3% down and the rate will be a little better than a subprime loan.

If someone were to fall within this category but have no assets and no savings, can they still get a mortgage?

Yes, use gift funds or home buyers assistance program.

I was about to ask why gift funds or a homebuyer's assistance program would be necessary if you have 3% to put down on an FHA loan, but I think perhaps you mean to use the gift funds for the 3%. Is that right?

I think I will have 3% in my own funds to use as a downpayment but I do not have any other assets or savings to show. I thought that might stand against me being approved.

[DocDon]

I appreciate your comments because today is my first postings here and I got slammed by some guy (amortgageman) I am very new to this site, just registered over the weekend and thought what a great resource, so I make a post and am thinking I am actually helping others and out of no where comes sarcasm and ego towards my posting? I replied to his sarcasm b/c we are on here to help, not as in competition.

Thanks for the support.

I'm not pointing fingers, and you're certainly very welcome on this site.

All of you in the mortgage business are valued members for your knowledge and insight.

Debate is always welcome. Bickering is not. So I'm simply saying, please stop.

Carry on.