Credit score: Safety is a two-way street

Being able to have a house to call your own, free of rent and a place to build a family is a dream for many. But first, there are a few hoops to jump through. The FICO credit score (Fair Isaac Corp.) is one of the first. With the Dodd-Frank Wall Street law signed by Obama in 2010, getting high-risk credit has become a bit complex, especially for those with low credit scores.

Thus, the minimum score required to buy a home depends on the type of credit the buyer qualifies for. The higher the score, the lower the mortgage rates.

In consultation with FICO, first timers are required to have a minimum credit score of 580 to qualify to buy a property. If your score is lower than that, a 10% advance is required. Typical FICO minimum rates by type of mortgage are as follows:

FHA Loan – 580+ credit score means bad credit;

VA Loan – 620+ credit score, implies poor credit;

USDA loan – 640+ credit score, considered fair credit;

Loan FHA 203K – credit score of 620+, is taken as average credit;

Conventional Loan – 620+ credit score, high credit score.

Lenders are also interested in factors such as the borrower’s recovery after financial difficulties, accumulated debts, payment histories in the past 12 months.And also, if the borrower has a stable source of income.

Measures that can be taken to achieve the credit, even with the low score:

Organization: Faced with poor or low scores, it is normal for creditors to request documents such as proof of payment, savings and investment deposits, facts that prove a financial life that can honor commitments. It is important to have them guarded;

Pay to delete: An agreement in which the balance of a debt is paid and, in return, the lender agrees to remove the account from your credit report;

Ask for help: A cosigner who has high credit score can help when applying for a loan. Or, the petitioner may ask to be an authorized credit card user of a relative or friend. The credit history will be added to the report, which increases some points in the FICO result;

FHA Loan: The mortgage that is insured by the federal government and directed by lenders involved in the program and has smaller requirements for granting the loan.

Taking into consideration the aspects mentioned here, are of great value to achieve better rates in relation to the mortgage which will directly reflect on the quality of life for those who will acquire your house.