January 11, 2013
A reader asks, “I have poor credit. I am a single mother of 4 and need to buy a bigger home. I have noticed reading several posts, that the lowest credit score FHA will accept is 580. Is this true in every case? After I was divorced my credit score dropped, big time. Everything was divided in court but at the time I was not working and it ruined my credit.”
The answer to this question is likely one the reader doesn’t want to get. The reader asks if the FHA minimum credit score requirement is true in every case, and the short answer is “No”. However, the reason is due to the lender’s additional requirements for credit scores, not a more lenient loan policy on the FHA’s part.
The FHA minimum credit score requirement is just that–a minimum. The lender is permitted to require a higher credit score in order to grant loan approval, and this is a common practice. Most borrowers will find lenders willing to work with them with their credit scores are in a range that starts at about 620 or 650 or higher, depending on the lender. Borrowers who have credit scores in the 500 range may experience difficulty obtaining a loan.
The best thing any borrower with poor credit can do is to contact the FHA by calling 1-800-CALL FHA and request a referral to a housing counselor who can help the borrower establish better credit and a reliable payment history. FHA-referred housing counselors will NOT “fix your credit” for you and borrowers should avoid wasting time and money paying third parties to “fix credit”.
Borrowers are perfectly capable of fixing their own credit when armed with the right information, which is available from reputable sources. Call the FHA to be referred to an approved agency. Repairing credit and becoming creditworthy does not happen overnight. Be prepared to invest time and personal effort to become ready for an FHA loan; those who do find the results are worth the time.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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