Posted on: 11th Oct, 2009 12:30 pm
Can you tell me who will lend to consumers with credit scores of 550?
There are regional or local lenders who will do that. Will depend on where you are located. Please provide more information.
The rates will be high for sure
There can't be any mortgage lates, if a bankruptcy is involved it must be seasoned without any lates on anything since the discharge, and there must be some reasonable tradelines.
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My company can lend down to a 550 credit score on purchase transaction through our Portfolio FHA product. First Guranty and Mid island can as well
Instead of apying higher rates, first try to improve your credit score
When is a rate in the mid "5's" to low "6's" a high rate. I'm not looking to steer people in the wrong direction but, telling them they need a 620 score for FHA is incorrect. People read that and get their hopes up. Many have had issues in the past whether it be divorce, medical, etc. that may have caused their credit scores to decrease. Even though their scores are lower doesn't mean they shouldn't be eligible for a loan hence the reason why EVERY month I close a minimum of 4 loans that fall into the sub 620 category. I'm not claiming that every loan under 620 will be financed but, they still have a shot. Atleast with my company and yes.....it's an FHA loan.
Bottom line is that credit score is just ONE component or determining factor as to whether your FHA loan application would be approved.
theo, having recognized that there are options such as you describe and that you offer, i have ceased using 620 as the magic number for the most part.
i agree with you that a score below that level can be caused by all sorts of difficulties, and that a person isn't necessarily a terrible risk despite a low score. and, as eric has so poignantly pointed out, all the other factors that come into play make a difference. if ratios are low, if there's a fair amount of cash in the deal (and reserves), if the underlying reasons for the low score have been resolved....all these can make for a loan that is worth making.
and, an aside...are you national in scope?
i agree with you that a score below that level can be caused by all sorts of difficulties, and that a person isn't necessarily a terrible risk despite a low score. and, as eric has so poignantly pointed out, all the other factors that come into play make a difference. if ratios are low, if there's a fair amount of cash in the deal (and reserves), if the underlying reasons for the low score have been resolved....all these can make for a loan that is worth making.
and, an aside...are you national in scope?
