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FHA mortgages have more forgiving FICO score requirements, it’s true, but lender standards will also apply and it’s crucial to examine your credit and adjust your credit habits long before you apply for a mortgage loan.

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Need Credit Repair Before Your FHA Loan Application?

Need Credit Repair Before Your FHA Loan Application?
July 28, 2018 - Do you need credit repair? Are you considering using a credit repair service before you apply for an FHA home loan?

FHA mortgages have more forgiving FICO score requirements, it’s true, but lender standards will also apply and it’s crucial to examine your credit and adjust your credit habits long before you apply for a mortgage loan.

No matter what resources you use to attempt credit repair, if you are in a position where past financial problems have affected your credit reports, there are some important things you should know about fixing bad credit.

The first is that there are many third-party companies that are happy to take your money for things you can do yourself. And there are just as many things a consumer cannot do with credit repair as CAN be done.

For example, you cannot remove accurate, up-to-date information from your credit report. That means that if you have missed payments on your credit record-especially in the last 12 months-contesting the credit report won’t do you any good.

The accurate and timely information will stay on your record. That is true no matter what a third party company might promise.

Another important issue-debt settlement. If you are in the planning stages for an FHA mortgage and you are tempted to use a third-party debt settlement option, keep in mind that any missed payments in the 12 months leading up to your FHA mortgage loan application will reflect poorly on you as a good credit risk.

If your third-party debt settlement plan involves skipping payments for a period of time, you might wish to reconsider such a move and try to work with your creditors directly to arrange alternate payment options on a predictable schedule, and get that arrangement in writing so you can show the lender.

You will need to have a set period of making these payments before you can apply for an FHA mortgage in some cases, depending on circumstances.
Any solution that requires you to skip or miss payments is likely to be problematic in the 12 months leading up to your home loan.

Some third parties might suggest applying for a new Social Security Number or other identification as a way to apply for a large line of credit without being associated with past credit mistakes. Don’t fall for this. It is not an acceptable practice and could get you into a lot of trouble.

A better place to begin with credit repair than a third party is credit COUNSELING. Counseling is not the same as credit repair since the counselor is working with you to empower you to work on your own behalf.

The FHA offers referrals to HUD-approved housing counselors who can offer help and advice to plan for your home loan including how to financially prepare.

But a fully dedicated credit counselor is also a very important service you should consider when thinking about how to repair past bad credit mistakes ahead of your FHA home loan or refinance loan application.

You will be very glad you sought out reputable help.

You can get started with the housing counseling portion of your FHA home loan planning by contacting the FHA directly at their toll-free number 1-800 CALL FHA to request a referral to a local, HUD-approved housing counseling agency in your area.

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