March 13, 2014
A reader asks, “I have a credit score of 582, I made pretty poor financial choices in my 20′s and am working to improve my credit. I make an average of 72,000 a year now and my credit hinders my every move. I want to purchase a home and feel that no one will even consider me for a loan because of my credit.”
“This would be my first time buying. Are there any recommended lending companies that will work with my sort of situation. I would prefer an FHA loan so I can qualify for the down payment assistance but I know I can’t ask for too much given my circumstances.”
Borrowers in these circumstances should definitely begin with some good advice from a HUD-approved housing counselor.
The FHA refers people to HUD-approved counselors to get help with pre-purchase planning, budgeting, credit issues, and much more. It’s important for borrowers with “marginal” credit scores who are concerned about FHA loan approval to come into the application process knowing what’s expected, how long it might take to fix credit issues, establish a reliable payment history, and get ready to apply for the loan in general.
This housing counseling should take place as early in the loan planning stages as possible for a variety of reasons. For example, borrowers who have missed payments on their financial obligations in the last 12 months are strongly encouraged to make sure they have a full year of on-time payments on their record to show reliability. Lenders are much more favorably inclined to work with borrowers who have this type of repayment history.
That sort of knowledge can seriously change the borrower’s time frame for applying if more time is needed to establish reliable payments and show enough history of those payments.
Potential FHA borrowers can get a referral to a HUD-approved housing counselor in their area by calling the FHA directly at 1-800 CALL FHA.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get 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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