Your FICO score or credit score is involved in determining if you can qualify for a FHA loan. There are three major credit bureaus in the US — Experian, Equifax, and TransUnion — and lenders require that your credit report be pulled at all three bureaus when you apply for a loan. A credit report that includes all three bureaus is called a tri-merge credit report. The FHA officially adopted a minimum credit score of 500 but that rarely comes into play as many lenders have adopted higher credit scores of say 580, 620 or even 640.

There are some credit issues that will disqualify you from getting a regular FHA Loan. These include: a chapter 7 bankruptcy in the last two years, a foreclosure in the last three years, a chapter 13 bankruptcy in the last 12 months, unpaid tax liens, judgments, or non-medical collections and recent 30-day+ late payments on mortgages, credit cards, or other obligations (if it looks like you are living beyond your means currently you likely won’t qualify for an FHA loan until you can get 6+ months of on time payments on your obligations).

If it is just the number that is the problem and none of these above items apply to you then there are ways to go about changing your credit score.

• Pay down your credit cards is an easy way to raise credit scores. Simply bring your credit card balances down to less than 30% of the credit limit and your scores will shoot right up.
• Document incorrect information. Credit reports often have incorrect information. If you can document that a reported outstanding collection has already been paid or that other derogatory line items are incorrect we can often get the information deleted or ignored.
• Pay off outstanding tax liens, collections or judgments. In many cases debt collectors will accept 40% of an outstanding debt as payment in full. When the number and size of collections aren’t overwhelming simply settling with the collector and getting paperwork to prove it is often the best approach.
• Work with credit specialists. When someone’s credit history is especially beat up with old late payments, collections, bankruptcies, etc. being reported, the fastest way to get qualified for an FHA loan is often to work with a credit optimization specialist. There is a fee associated with this service, but it is worth it if it can clean up your credit.
• Work with a credit counseling company. If you are dealing with a loss in income and are currently behind on your monthly mortgage or other obligations sometimes a credit counseling company is the best bet. In such cases we refer people to an especially effective and reputable credit counseling firm that focuses on helping people slowly pay back all of the principle they owe while paying dramatically reduced interest rates.

If you would like to find out more about your qualifying for an FHA loan please contact us – we get documents to title in 10 days – Guaranteed!