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Articles Tagged With: Credit History

FHA Loan Questions: Credit History–What Counts?

We get a number of reader questions about FHA home loans, and many of those include questions about credit history. Does the presence of a few late payments on a borrower’s credit history jeopardize an FHA loan application? In general, it’s best to come to the FHA loan process with at least 12 months of on-time payments on your record, but we should examine the FHA loan rulebook (HUD 4155.1) to see what instructions are given to participating FHA lenders about credit history. These instructions can be found in Chapter Four, Section C of HUD 4155.1. They include the following, found under the heading “Documenting an Analysis of Delinquent Accounts”: “The lender must document the analysis of delinquent accounts, including whether late payments were based on • a disregard for | more...

 

FHA Loans and Credit Improvement: A Reader Question

A reader asks, “I’m looking to be a first time home owner by July 2014. My credit isn’t good (607 at this time). However, I’m looking to improve my credit score significantly by June. I’m unsure where to get started in the process of getting a mortgage loan. Just need some help with the very basics in getting started.” Borrowers who need to improve their credit scores before applying for an FHA home loan need to be realistic about how long it might take to do so. It’s strongly recommended that borrowers come to the FHA loan process with at least 12 months of on-time payments for all financial obligations before applying. Why is that? The answer can be found in the FHA loan rulebook, HUD 4155.1, which has a | more...

 

FHA Loan Reader Questions: Late Payments on Credit History

A reader asks, “My wife and I have already completed home inspection,down payment and now must apply for FHA. We have already been officially told we qualify by score and income. I would like to know when mortgage companies look back at credit history and notice at least 3 creditor with late payments on them but I have the backing that I was in combat and wounded and not able at the time to pay it on time. I am 100% Disabled with VA award letters, can the company allow this as an acceptable excuse for not paying on time?” FHA loan rules on credit history are found in HUD 4155.1, Chapter Four Section C, which says: “Past credit performance is the most useful guide to • determining a borrower’s | more...

 

FHA Loan Credit Score Rules: A Reader Question

A reader asks, “If my credit score is currently between 618 and 630 why can’t I qualify for a loan? Does it have to be 700?” The answer to this question may not be as simple as citing FHA loan policy on credit scores, but it’s a good place to begin. Credit score minimums, according to the FHA loan rules found in HUD 4155.1, are as follows: These are MINIMUMS found in the FHA loan rulebook, and there’s nothing that says a lender cannot require a higher minimum score as long as those requirements are applied in accordance with Fair Housing Act laws. But credit scores alone don’t determine whether a borrower is eligible for an FHA home loan. Credit repayment history is also a factor. If a borrower comes to | more...

 

FHA Loans, Missed Mortgage Payments, and Refinancing Loans: A Reader Question

A reader asks, “I inquired about a refi with [a lender], I have a bankruptcy on my credit report but I have been out of it for three years. I was told that I had two late payment on my report thru my credit union.” “I informed the person that I spoke that my payment to my credit union was automatic payment and that those were no fault of my own. He explained to me that I would have to contact my cu and they would have to call the reporting bureau, he also stated that until that was remove I would not qualify for a loan. Is this true?” This reader question raises a very good point about FHA mortgages all borrowers should keep in mind. Not all lender | more...

 

FHA Updates Loan Rules On Credit, Collections, and Judgments

  A recent reader question asked, “I have an outstanding judgment in the amount of $8000. Can I still get a loan?” FHA loan rules are clear on the issue of credit, stating that past credit performance and patterns are considered one of the best indicators of whether an FHA loan application should be approved. But recently, the FHA has issued clarifications and updates to lenders on the subject of judgments, collections and other activities that could be considered negative credit data. According to FHA Mortgagee Letter 2013-24, Handling of Collections and Disputed Accounts, the FHA has amended its guidelines and policies for collections, disputed accounts, and judgments for most credit-qualifying FHA loan transactions. It applies to all affected FHA loans with case numbers assigned on or after October 15, | more...

 

FHA Loans and Your Credit

For some borrowers, the credit approval process is a mystery, especially when it comes to FHA home loans. Do you understand what the lender needs in order to approve a home loan application? Borrowers should understand that FHA loan approval is based on several factors including FICO scores, debt to income ratio, but also the repayment history shown on your credit report. FHA rules and instructions to the lender on this area are found in HUD 4155.1 Chapter Four. In Section C, we get some insight into this process and how the lender is supposed to evaluate your repayment history as found in a credit report: “Evaluating credit involves reviewing payment histories in the following order: • first: previous housing expenses, including utilities, • second: installment debts, • third: revolving | more...

 

FHA Loan Reader Questions: No Credit History?

A reader asks, “I had a question about buying a home with no credit. My partner has had a very good job for over 2 years now and I am a stay at home mom. Our problem is that she has no credit it’s not bad credit it’s no credit history.” “I, on the other hand have some credit but since I stay home that wouldn’t be sufficient. She has records of paying her bills on time and rent on time. Would we be able to qualify for a home loan with that information and no credit?” The answer to this question is found in the FHA loan rules as published in HUD 4155.1 Chapter Four Section C, which states the following: “The lack of a credit history, or the | more...

 

FHA Loan Reader Question: Checking Credit Scores

A reader asks, “I did have bad credit at one time but I would say I have good credit now. I found out I had 2 things against me but I have taken care of them, they were small amounts but they would be the only thing against me over the past 5 years. I have paid off a car that I paid for over 5 years and also several small loans.” “I am buying a mobile home through the owner but I want to build a house on some property that I own and I am not sure about my credit score and wanted to know if there is any way of finding out if I would be eligible for an FHA loan without applying for the loan and | more...

 

FHA Loan Credit Guidelines

We get many reader comments and questions about qualifying for FHA guaranteed home loans. Borrowers new to the home buying process are often concerned that they may not qualify for an FHA mortgage loan because of student loans, past mistakes with credit or other factors. While the FHA does have rules and regulations concerning these areas, borrowers should know that the rules can be more forgiving than some might assume. In its instructions to lenders in HUD 4155.1, FHA loan rules state: “Past credit performance is the most useful guide to