(Originally published September 7, 2009.)
The mortgage industry is continuing its evolution towards higher and higher credit requirements. This month, FHA announced it will require minimum credit scores of 640 for all borrowers. This continues FHA’s steadily increasing credit requirements since early 2008, when borrowers with scores in the 400s were still eligible.
This latest move further validates what I’ve been preaching for years. If you’re planning to purchase a home, do not wait until you’ve found a home before considering your financing options! Talk to a trusted mortgage professional before beginning the house-hunt. In fact, you should have a financial review performed at least 6 months before a mortgage is needed.
The days of getting a decent mortgage with crummy credit, are long gone. The entire mortgage industry is subject to stringent credit requirements that every lender must adhere to. The best interest rates require 740 scores. Anything lower will likely result in higher costs. There is, however, some good news: You can improve your credit scores if you know what to do.
What are your credit scores? Not knowing might cost you hundreds of dollars per month. MAJOR CAVEAT: Checking your credit scores online could result in a false sense of security since the scores received might not be genuine. Beware of counterfeit credit scores! So how can you tell what scores are fake and which are genuine? I’ll address that in my next newsletter.
For now, contact me for a free credit analysis. I’ll provide your true scores. If there are mistakes on your report, I’ll show you how to fix them. And if your credit history is less than stellar, I’ll even explain how to improve it. Since raising your credit scores can take some time, the key is to address it now, before your credit scores become an issue.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.