July 30, 2014
A reader asks, “My credit score is 583 on Quizzle and 604 on Credit Sesame, what is the criteria for credit scores? Would I have a chance of getting approved for a refinance cash out?”
The first issue we’ll address here is credit reporting–your participating FHA lender will check your credit scores as reported by the three major credit reporting agencies. Those agencies are Equifax, TransUnion, and Experian. It may be best to contact these agencies directly to request your credit scores as that is what your lender will use.
FHA loan rules state that, technically speaking, borrowers with credit scores above 500 qualify for the FHA loan program. That said, FHA loan FICO standards are MINIMUM standards, and the lender is free to require a higher minimum FICO score. Chances are good that the lender WILL require a higher FICO score and so borrowers should anticipate being held to a higher standard than the FHA minimums.
Borrowers with marginal credit or who are concerned that their credit scores are not high enough to qualify should contact the FHA directly to request a referral to an FHA/HUD approved housing counselor who can help with pre-purchase issues including preparing your credit, how to check your scores, and what might be needed to legitimately fix credit issues without having to pay a third party.
There is a bit of advice for borrowers who want to apply for major lines of credit including cash-out refinancing; start preparing at least one year ahead of time in order to give yourself the best possible chance for loan approval. Borrowers who pull their credit scores early have a better chance of getting ready because working on credit issues where needed can take time.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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