FHA Loan Tips for Improving Credit
Track Your Credit Score and Stay on Top of Problems
While FHA loans are known as a great service for people looking for help buying a house, applicants can make the process even easier if they take steps toward ensuring their credit history is in tip-top shape. The agency advises prospective home buyers to approach FHA loans with their best possible credit history to eliminate any potential risk of not qualifying.
Whether you're looking for a loan to mortgage a new house or to refinance a house you already own, it makes the most sense open up all your options with an optimal credit rating. The FHA recommends having a satisfactory payment history of at least one year before applying for a loan.
Credit Tips for Your FHA Loan
Here are some tips to help you on your way:
- Take a Close Look at Your Credit ReportsYou don't know what could be hurting your credit score unless you actually check. Get your credit reports from the three national credit bureaus--Experian, Equifax and TransUnion--at no cost and comb them over for anything suspicious or questionable.
- Dispute InaccuraciesIf you find errors on your credit report, notify the reporting bureau in writing so you have a record. Provide any additional records or evidence you have to support your dispute.
- Find Professional HelpThe FHA recommends applicants with credit problems get help from a Consumer Credit Counseling program. A credit counselor can help you get back on track.
- Bankruptcy / ForeclosureIf you've suffered from a bankruptcy or foreclosure in the past few years, you might still be able to qualify for an FHA loan. Develop a satisfactory payment history, re-establish good credit and meet the other FHA requirements.
While your credit history is just one of the many factors that make up your eligibility for an FHA loan, it is no doubt one of the most important. Having a higher score not only helps you qualify, you can also benefit from the low 3.5 percent down payment on mortgage loans available to applicants with a FICO score over 580. FHA approved lenders don't take your credit history lightly, and neither should you.
Helpful Advice About Credit Scores and Loans:
FHA Loan Articles and Mortgage News
March 15, 2017 - Credit issues worry some FHA loan applicants. Not knowing how the lender will interpret some kinds of negative credit information causes a lot of anxiety for new borrowers. However, having a collection account on your record may not be an automatic barrier to getting an FHA mortgage.
February 10, 2017 - The Federal Housing Administration is lowering mortgage insurance premiums on FHA mortgage loans in 2017. When you purchase a home with an FHA mortgage, part of your mortgage payment includes a required annual mortgage insurance premium (MIP).
December 8, 2016 - Your FHA loan options in 2017 include new purchase loans, reverse mortgages, cash-out FHA refinance loans, and much more. Borrowers should take some time to review their last 12 months of credit and loan repayment history in preparation for the new loan.
October 31, 2016 - What does a borrower needs to know when preparing to apply for an FHA mortgage? There is a list of items to pay attention to that does include FICO scores; you may find that lenders are looking for FICO scores averaging between 620 and 640.
September 26, 2016 - Many borrowers want to know if the income coming from 401K accounts can be used as part of the debt to income calculation. What does the FHA loan rule book say about using a 401K to qualify? Are there cases where 401K income can be used in eligibility calculations?
