Buying a Home with a Low Credit Score

If you’re considering purchasing a home now or in the near future, but have less than stellar credit – take heart. While it may be more difficult to buy a home, it’s not impossible. There are many programs that offer flexibility for those who do not have a high credit score but may qualify for home financing in other ways. Such programs include Federal Housing Administration (FHA) and Veterans Administration (VA) loans.

Understanding Your Credit Score

As a lender, Freedom Mortgage cannot provide credit counseling to individuals – however, we can point you toward useful information that has been compiled by annualcreditreport.com and the Federal Trade Commission (FTC).

The first step in improving your credit is to obtain your credit report. Visit https://www.annualcreditreport.com where you can fill out a form to request one, two, or three reports from the major credit bureaus: Equifax, Experian and TransUnion.

When reviewing your credit report, check that it contains only items about you. There may be loans or other data pertaining to another person with your name. For example, if you see an address listed as a former place of residence, but you never lived there, that is an error. Also, look for any other errors or information that should no longer be on your credit report such as bankruptcy from many years ago. If you find errors, you should contact the credit bureau to dispute the inaccurate or incomplete information.

Improving Your Credit Score

If you would like more information on how to increase your credit score, visit http://www.consumer.ftc.gov/articles/0152-credit-scores#improve. Below is a summary of the information on that site:

  • Pay your bills on time. Late payments and bankruptcies can lower your score.
  • Stay under your credit limit. As the amount you owe on a credit card gets closer to your credit limit, you score may suffer.
  • Don’t apply for too many credit cards at once. It’s fine to establish different types of credit accounts over time, however, if you open lots of lines of credit especially when you are buying a house, it may negatively impact your score.

The team at Freedom Mortgage is here to serve your home financing needs throughout the mortgage process. Find out more about the services we offer by visiting www.freedommortgage.com or call Freedom Mortgage.

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