+2 votes
I spoke with a loan officer and she advised due to me not having much credit (Experian showed me at 535) I wouldn't qualify for an FHA loan. She recommended that I open up a secured credit card with my bank and use it strictly for gas and make on time payments. Can you advise as I thought FHA loans helped those who are first time home buyers and have minimum credit requirement. Its disturbing because I have 10K saved but unfortunately due to not really establishing credit when I was younger (I purchased everything with cash so I wouldn't incur debt) it has worked against me and may force me into having to rent home instead of using my money to invest in myself. Hope I could get some advise on this.
asked Nov 19, 2017 in FHA Loans by Nicole

2 Answers

+1 vote
FHA does allow non-traditional credit reports to be generated based on payment history from accounts that do not show up on your credit report. For instance, insurance premiums, child care services, school tuition (see more options at https://www.hud.gov/sites/documents/4155-1_1_SECC.PDF page 1-c-13). The loan officer might be telling you that you don't qualify because unfortunately you got one score from a bureau. It would have been better to get no score at all. Some lenders won't let you get a non-traditional credit report to "cover up" derogatory items on your traditional credit report. So, I'm wondering if there are any "bad" accounts on your credit report that shows a 535 score, or if there's just no history, so the bureau just gave you bad score for that. In any case, show your loan officer the above mentioned FHA guidelines and see if they can generate a non-traditional credit report. If not, try another lender.
answered Nov 21, 2017 by TimLucas (10,040 points)
0 votes
Getting a few secured credit cards with at least $500 credit limit will boost credit scores right away.
answered Feb 10, 2018 by GustanCho (106,540 points)

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