
Can You Get a Loan If Your Credit Is Below 620?
Around 30% of the U.S Population have a credit score that is considered “poor”. That is below 620. That means nearly a 1/3 of the population may consider themselves ineligible to get a home mortgage. While it’s better to have a higher credit score, it is possible to get a mortgage with a credit score between 580-619.
Things to consider if your score is low
There are different reasons why a persons credit score may be lower, it could be they have mismanaged their debts and now have collections, it could also be their credit cards are maxed out which brings their score down; but you may be one that just doesn’t have a credit history. Some people don’t attain credit until later in life because they have been able to pay for most things in cash. But as your life’s demands grow you will eventually need credit to get things like homes and automobiles. You can find more information about the average credit score in America and why, here.
Ways to build credit
Can you get a loan with low credit?
The short answer is yes, and the interest rate is generally not that much worse either. There are certain loan programs that allow you to qualify with lower credit. But there are additional criteria needed to get you to the finish line, here is a quick list of things you can expect:
1) 12 months rent verification (Canceled checks or a verification from your landlords management company)
2) No immediate late payments in the last 6 months (credit cards/ mortgage / car loans /etc)
3) Reserves (additional savings beyond the down payment and closing costs
These are some key items that are required if you are a lower credit score, so if you’re planning to buy a home it may be wise to get them un order. Your loan officer will also ask for them. You also have the option to work with a credit restoration company, I highly recommend Heather Farley at Aloft Credit Repair.
The Take Away
Building credit isn’t easy, but if you are working with a qualified loan officer you will have a much greater chance of getting a home. Sometimes preparation is 90% of the process, so it’s wise to meet early and often with your loan officer to get a head start and see if you need any type of credit repair or planning.
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Justin Scott
NMLS 8758581
Executive Mortgage