How Credit Scores are calculated is changing, and the minimum scores required for mortgage loans are going HIGHER! For information about “WHY” Credit Scores requirements are changing in NC, click here.
It’s important to know that Transunion began making changes to the way they calculate credit scores, and if you don’t change your credit strategy – you might not be able to purchase!
I think it’s important for First Time Homebuyers (especially) to know what credit scores they need so that they can take advantage of the $8000 Tax Credit, Low Rates and “Cheap Houses!”
If you are using VA Benefits, you need a 620 score, even though VA does not have a MINIMUM credit score! I think that (JMHO) because VA doesn’t have a minimum – those VA rates have gotten higher in the last 2 months! For details on Credit and Veteran’s Administration home loans click here! Again, do not be surprised if the VA rates are not as “cheap” as the FHA and USDA rates! This is a SHIFT!
USDA Home Loans are probably the most “forgiving” on credit requirements, but you still need to have at least two of your scores over 600. Even with that, it’s VERY difficult to get a USDA Backed Mortgage Loan without at LEAST a Credit Score of 620!
If you are purchasing a home in NC and want to use a FHA mortgage loan program – you really do need 620 credit scores. I know that there are people out there who are advertising that you can get a mortgage with a credit score lower than 620… but I’m telling you from my experience – those home loans are NOT CLOSING!
I already know it’s not going to be popular, because we NEED good, open, used, credit right now! Just paying off “bad” credit will not raise your scores enough!
Here are some of the biggest things you can do:
- Do not pay off collections that are older than 24 months without speaking with a lender first. It is possible that by paying off an old debt you will “revive” it and cause your score to go down.
- DO payoff anything that’s not medical related and over $100 on your credit report within the last 2 years.
- Make certain you have at LEAST 2 OPEN revolving accounts reporting to all three agencies showing on your credit report.
- Make certain you have at LEAST one OPEN installment debt reporting to all three agencies showing on your credit report.
- PAY YOUR BALANCES DOWN. This is possibly the single biggest thing you can do! I’ve seen this one thing increase a score 40 points!
If you have questions about purchasing a home in NC, or refinancing a mortgage – and have questions about how your credit score might need to change to qualify, please call Steve and Eleanor Thorne, Mortgage Loan Officers at RCBNA – in Cary, NC 919-649-5058 Connect With Us on Facebook
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Wow – Did you see that Transunion went live with FICO 08 in February! Equifax is rolling it out this fall but Experian won\’t say when or even if they are releasing FICO 08.