FHA Home Loans for People With Bad FICO Credit Scores

For a lot of people, their FICO scores start out excellent and as time goes by, it will go down as you add on more debt, max out your credit cards and miss a payment or two. Basically, credit scores are the main basis of financial institutions if they will lend you money. The higher your score the better the chance that you will qualify for an FHA loan without a large down payment. But, if you do not have an above average credit score, there is still hope. The FHA does offer home loans to people with bad credit scores.

When you are planning to get a huge loan like an FHA home loan, a bad FICO credit score will really make things tough. Here are some of the qualifications that you need to meet to apply for this kind of loan.

First, the borrowers must have a FICO score of above 500. If you want to apply for an FHA home loan, you must have a score of 500 and up. If your credit score is below 500, then you are not eligible for the program. The best course of action is to work on reducing your debts and making all your payments on time. Then you can recheck your FICO score and reapply for a mortgage loan if your score has increased.

Second, borrowers can qualify for a 3.5 percent down payment option if they have a credit score of 580 and above. It only means that they can put as little as 3.5 percent down payment when they are using an FHA home loan. This is one of the main benefits of an FHA loan over a conventional mortgage loan.

Third, 10 percent down will be required from borrowers who have a FICO score between 500 and 579. If your credit score lands between 500 and 579 then you will have to put a 10 percent down payment. This shows you how big of a difference a few points on your score makes.

However, FHA home loans are not only given to people with good FICO scores. There are also FHA loans that are given to people with bad FICO scores. There are some financial institutions that are willing to provide home loans for people with bad credit.

Usually, traditional loans offer lower interest rates and they offer lower fees at closing time but what people need is an FHA home loan for bad credit to help them improve their credit scores. You must remember that FICO scores easily go down even if it is only a small mistake and it will take a very long time to bring it back up.

A lot of banks offer different kinds of loans through that FHA program. It is a program funded by the government. The loan process is very similar to traditional loans but you must be aware that it may add some extra fees. These fees are considered as some sort of penalty. The extra fees that will be incurred are well worth it because for people with bad credit, this will be their only option.

Next, get your free Credit Karma credit score with no credit card required.

Get your complete financial picture absolutely free. Find out what is causing your low FICO score and how you can add positive points to your credit report.

How to Compute My FICO Credit Score Rating

Getting a good credit score can help you qualify for low rate private student loans, bank cards, car loans, and historically low home loan rates. But how do you know if you have a good credit score or not? Is there a way to compute your credit score? We will try to answer these inquiries over the subsequent few moments.

Your FICO credit rating can land somewhere on a 500 point range from 300 to 850.

Take a look at the numbers beneath at the factors that decide your FICO score:

35% Payment History – equal to 192.5 points of one’s rating
30% Debts Owed – 165 points
15% Length of Credit History – 82.5 points
10% New Credit – 55 points
10% Types of Credit in Use – 55 points

As you are able to see if you want to have the very best chance of obtaining a high score, you want to pay all of your bills on time and keep the amounts you must pay back to lenders to a minimum.

Now what you are able to do is acquire all 3 of one’s totally free credit reports from the government’s annualcreditreport.com site and begin reviewing all of the information. The longer you’ve paid all of your bills on time the greater the opportunity you’ll receive all 192.5 points in the payment history area. 24 months of on time payments is good, 36 months is better, 48 months and longer is very best.

Subsequent you check how much you owe on every bank card or outstanding loan. If all your bank cards are maxed out you’ll possess a lower rating someplace within the 600s or lower. If you’ve utilized half of your outstanding credit card lines, you may have the ability to get 80 points or much more from the amounts owed area.

Next you look at how long your credit accounts have been opened. Five years is good, ten years is better, and 15 years or more is best. If you are a 21-year-old new college graduate, it is not feasible for you to have a long-term credit record so you’ll be unfairly dinged for this section of your FICO credit score. The only way to get more points from this area would be to keep your accounts open and pay all of your expenses on time.

The next area to help you manually estimate your credit rating is looking at your new credit record. MyFICO states that you only apply for consumer credit that you truly need. Even hard inquiries can decrease your FICO score. These can come from insurance companies, mortgage businesses, or bank card businesses to name a few. So in the event you do not need new credit cards, don’t apply and you are able to add an simple 55 points to your FICO credit score.

The last section is the kinds of credit you have in use. Ideally you should have short and long term debts plus fixed installment records and revolving credit kinds. Nevertheless this does not mean that in the event you do not have 1 type of credit that you simply should go out and apply for that kind. A great credit mix could include a mortgage loan, car loan, student loan, and bank card.

Now you add up all your points and you have approximately estimated your FICO credit rating. This is a long and tedious process. A much quicker way is to acquire your free FICO score in mere seconds and then use a credit score calculator to show you the effects potential adjustments have on your FICO score.

MyFICO And Credit Karma Compared – Are They Safe And Legit To Use?

There are thousands of reasons why it is important to keep track of your credit scores. Knowing where you stand with your credit can help you qualify for a low rate mortgage or car loan. Having a bad credit score can cost you thousands over your lifetime and this is all the reason you need to keep an eye on it. This explains why there are so many free credit score offers out there.

Several of these free credit score offers come with a catch. Let us do a quick comparison between MyFICO and Credit Karma’s free credit score offers and see which one is truly free.

MyFICO Review

MyFICO offers a free FICO credit score which they claim is the one most major lenders use. And this is true. Most major lending institutions pull your FICO score when they want to evaluate your credit and decide to give you a loan or not. You do not need a discount code or coupon to get the free credit score.

With their free FICO score offer, you get to see your score and a full explanation of how lenders view you. Along with this free FICO credit score offer is a 10 day trial of Score Watch which costs $12.95 each month. Score Watch will monitor your Equifax credit report daily and your FICO score weekly. You can also get alerts when your credit report gets updated with negative information that may not be accurate.

Credit Karma Review

Credit Karma claims to offer an absolutely 100% free credit score with no credit card needed. This offer comes with no strings attached and nothing to cancel. They also offer tools to help you analyze your credit report and offer you a free credit score update so you can see which way your score is headed.

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Credit Karma makes money when you sign up for some recommended services such as car insurance or apply for a new low rate credit card. Credit Karma is a safe and legit website to use to check your credit score free.

You can choose to get your free credit score from Credit Karma if you do not have a credit card or do not want to worry about having trouble canceling a credit monitoring offer like you do with the MyFICO offer and being charged for a service you do not want.

Hopefully this MyFICO and Credit Karma comparison will help you better understand the best free score offers out there.

Best Free Credit Score Offers

Credit Karma

Credit Karma provides “truly” free credit scores with no sneaky trial subscriptions or up sells. Credit Karma is 100% free with no credit card required or even asked for. You can update your credit score every month to see how you are progressing.

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Get access to credit simulators, free credit scores, credit advice, and credit score comparisons. Plus resources to help you save money each month and pay off your credit card debt faster.

You can see how your credit scores compare to the national average scores. You can also see how lenders view your credit scores – poor, fair, good, or excellent.

You also get an overall credit report card with an A to F scale with areas to focus on so you can improve your scores. The free credit report card provides details on your open credit card utilization, the percent of on time payments, the average age of open credit lines, total accounts, hard credit inquiries, total debt, and debt to income ratios.

Pros of Credit Karma:

Totally free credit scores with no catches and no credit card required.
Free credit tools to analyze your credit.
Resources to help you save money on auto insurance, credit cards, banking, and auto refiance offers and pay off your debts faster.
Does not lower your credit scores.

Cons of Credit Karma:

Credit report and score data only from Transunion credit reporting agency.
No identity theft insurance.

MyFICO

MyFICO provides your free FICO credit score – the one 90% of the largest banks and lenders use.

Knowing your FICO score can help you understand why you are denied for a mortgage loan, car loan, or credit card offer.

90% of the largest banks use your FICO score for credit decisions so it makes sense to know what your lenders are looking at.

A 100 point difference in your FICO score could mean over $40,000 extra in interest payments over the life of a 30 year mortgage on a $300,000 home loan.

Get a full explanation of your FICO score and how lenders view you.

Pros of MyFICO free FICO credit score:

A full explanation of your FICO score and how lenders view you.
Access to the score 90% of the largest banks use for credit decisions.
Daily monitoring of your Equifax credit report and your FICO score on a weekly basis.
Notifies you when you reach your target FICO score or when you might qualify for a better interest rate
Alerts you when unexpected changes to your credit report cause your FICO score to drop
Provides two Equifax Score Power reports each year

Cons of MyFICO free FICO credit score:

After 10 day free trial, requires $12.95 monthly fee.

Identity Guard

Identity Guard offers unlimited access to all 3 major credit reporting agency credit scores. You get a detailed analysis showing what is affecting your scores with data from Experian, Equifax, and Transunion.

You also get email alerts when your credit reports change with data that affects you.

You also get $1,000,000 in identity theft insurance with no deductible.

Identity Guard is one of the top rated credit score monitoring services online.

Pros of Identity Guard:

Provides unlimited access to all 3 credit scores.
Monitors all 3 credit bureau reports
Quarterly credit updates
$1 million ID theft insurance
Internet surveillance
Lost wallet protection
Personal ID theft response team

Cons of Identity Guard:

After 30 day free trial, requires $14.95 monthly fee.

Those are the best free credit score offers with and without a credit card required and with and without a free trial of credit monitoring.