Credit score under 500
Credit score under 500 - "What can I
do if my credit score is below 500", you may ask. Most lenders
out there will not accept loans with scores below 500. However,
there is hope. Experienced
mortgage brokers work with
hundreds and sometimes thousands of lenders throughout the
nation and work with lenders that specialize in these
An experienced mortgage broker can help consult you on what you need
to do to increase your
and get them back
over 500, and they can probably find a lender out there that can
finance you even though your score is below 500. There are programs
out there that will average your credit scores, use your high credit
score, and only look at your mortgage history and not your scores at
all. Therefore, contact a personal mortgage consultant to discover
what your options are and to map out a plan to improve your credit
situation and get the financing that you need.
When your credit score is below 500
there can be some serious issues. However if there is enough equity
in the property, you are sure to find a lender who will lend against
Something that I would advise anyone
with a credit score under 500 to consider would be legitimate,
professional credit repair.
Good credit repair companies can
often find flaws in the way derogatory information is documented and
reported and can often get it removed. Consult with me for a more
detailed description on what type of professional service you need
because you must beware, there are many scams and rip offs in credit
Credit repair companies charge fee's
that range from hundreds to thousands of dollars. You will want to
make sure you choose a company that not only charges fair fee's but
one that can offer references and show past performance. Your
mortgage broker should be able to refer you to a good credit repair
Generally, you will have a hard time
finding financing above 70% of your homes value if your score is
below 500. This means that, if your home is worth $100,000, you will
only be able to get a loan for $70,000. This is a severe limitation
for most people. For that reason, it is usually best to try to
bring your score up, either on your
own or through a credit repair company, before obtaining a mortgage.
When choosing a credit repair
company, make sure you find out if they have a limit to the
number of accounts or bureaus they target per month. You may be
surprised to find out they only go after 1 bureau per month and
up to 5 derogs per letter. These services will take the client
forever to improve. Try to find companies without limits like
Applicants with credit scores below 500 may still qualify for a
mortgage or a loan to
if they have enough equity or a large down payment
or equity in their home. The
lender will usually base their approval on the value of the
underwrite mortgage applications
base on three major criteria, credit scores, capability to repay the
mortgage, and equity in the property. With credit scores below 500,
a loan applicant must have positive compensating factors in other
areas. In other words, he needs to prove that he has high income
relative to his debts and that he has a bigger down payment.
There are many lenders out there that
will lend on credit scores below 500. The value of your property in
relation to what you owe is an extremely large compensating factor
with these lenders.
With sub 500 scores you are going to be
limited to very low Loan-to-value or LTV - meaning you will probably
only get 60-65% ltv loan on your home. You will need quite a bit of
equity to be able to finance.
If we are unable to find financing for
your property and you do have enough equity in the home we may go
hard money lender which only looks
at the equity in your home.
Mid 500 credit scores - There are many
home loan programs available out there for people with credit
scores, or fico scores, in the mid 500 range. The mid 500 range
consists of credit scores from anywhere between 530 and 570. Some of
the programs that are available for credit scores are listed
throughout this page.
There are many loan programs for people
with mid 500 scores that will allow you to purchase a home with as
little as 10% down. Some programs will even allow 90% financing all
the way down to a 500 credit score. Loan programs in this niche
change frequently, but most will require a
full documentation loan, that will
require you to prove your income, employment, and assets.
Most of these mid 500 score programs
are designed to be short term loans for borrowers. It allows them to
get into a home, get cash out, consolidate debt while waiting for
their credit scores to improve so that down the line they will be
able to finance a better rate/term loan.
There are benchmark scores that are
important when getting a loan. Some programs only become available
at certain credit scores. If your score is in the low 500's then
chances are an interest only payment is not an option. The same with
100% financing. Usually the benchmark for 100% financing is at 580.
However some lenders are now requiring 600.
This is why working with a mortgage professional that uses the "rapid
rescore" technique is so important. Sometimes just doing
a little credit fixing can make or break your next loan.
Score Under 500 Help Form