Knowing your credit score is critical if you want to know your chances of getting approved for a mortgage loan. The higher your FICO the better your odds of getting your mortgage loan application approved. Mortgage companies will close their coffers to consumers who have not shown good fiscal restraint over the past couple 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?
The first thing you should start with is finding out where you stand in creditworthiness. You can get them free of charge with no trials or credit card required from annualcreditreport.com, the government own credit report site. Go over your reports and make sure there are no errors in your accounts and all your activity is listed correctly. You want to be certain all of your good payment history is being reported accurate and it is boosting your credit score.
You can also access your FICO score free online 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 home ownership future.
Even though lenders are skittish about making loans to consumers with less than stellar FICO 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 allows more people like you who want to own a home qualify for a loan. 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 don't fret if you cannot find a conventional lender to approve your loan application, you may still be able to go through HUD and FHA government housing programs to get into a home even with a below 700 FICO credit score. Once you get approved for your home loan you can start working on building up your credit score even more by paying down your debts and keeping your borrowing to a minimum. And that also means not charging a bunch of new furniture because Suze Orman would say you cannot afford it. Then you will soon have a good credit score that Suze Orman would be happy to hear about.