Knowing your FICO score is important if you want to have a good chance of getting approved for a home loan. The higher your score the better chance you stand of getting approved for a historically low mortgage rate. Mortgage lenders are still rather hesitant to lend money to borrowers who have not demonstrated fiscal responsibility over the past few years. If you find yourself if this situation and you have a credit score below 700, Suze Orman says you have a bad credit score and you will probably not get approved for a home loan.
So what can you do if you find yourself in this situation and you are desperate to own a home of your own?
First of all you have to take an accurate assessment of your current financial situation. Get all 3 copies of your credit reports from the government’s Annualcreditreport site. Check your files for errors and make sure all your accounts are listed correctly. You want to make sure all of your good payment behavior is reported accurately and that you are getting credit for it.
You can also check your FICO score for free from the MyFICO site which Suze Orman recommends. This will give you a quick snapshot of how you are doing with your current obligations. It will also give you an idea of how your lenders will view your file along with your bank statements, W2s, tax returns, paystubs, stock and bond statements and any other assets and liabilities you have that will determine your homeownership future.
Even though lenders are skittish about making loans to consumers with less than stellar FICO credit scores, there are still government programs like HUD and FHA that can allow responsible borrowers the ability to get into a home.
FHA loans require a much smaller down payment and a lower credit score to get approved. This makes homes more affordable to you if you want to get your own home for your family. You may not have as much cash on hand because you just used a lot of it to pay down several of your credit cards in an attempt to boost your FICO score.
So if you cannot qualify for a conventional home loan with your below 700 FICO score but meet the other lending requirements, check out the government programs like HUD, FHA and even foreclosed homes. Once you get into your new home, you can work on building up your credit scores by paying down your credit card bills, keeping your good accounts open, not maxing out your cards, and not applying for new credit cards, especially department store charge cards, and showing good financial responsibility. Then you will have a good FICO score that you will be happy to call the Suze Orman show about.