Will I ever qualify for a mortgage?

Question

My current credit score is 562...Not great, I know. I have 3 negative items on my credit report that are scheduled to drop off this October. I have 3 others that I will have paid off by summer's end. This will leave 2 credit cards that I have open and in good standing for 2 years.

Do you think, if I keep the balances paid on my credit cards that my credit score will improve enough to qualify for a mortgage next spring? I've been aggressively cleaning up my credit report, and have noticed increases in my credit score every 2-3 months.

Answer 1

By next spring? Unfortunetly I doubt it. It takes years, typically 4-7 to improve such damaged credit.

But.... having said that, that doesn't mean you can't get approved for a home before then, you can. But your interest will be rather high.

Personally, I'd shoot for 2 years instead of 1.

good luck.

Answer 2

credit score is one very important part of getting a mortgage.  if the real estate market does not stabilize a credit score of 10,000 will not help.  do everything you can to eliminate any bad debt/ collections on your credit report.  more importantly will be saving CASH.  the bank is going to want to see at least 10% DOWN (traditional down payment is 20%).  you will also need to make sure your ratios (GROSS MONTHLY/ FIXED COST = car payments, utilities, student loans, credit card payments, etc) are strong.  Finally, be prepared to DOCUMENT your income.  Again, this is all predicated on real estate (macro economy) stabilizing. Right now banks are not real anxious to lend any money on property because nobody seems to know what anything is worth.  one last thing..  I hope you are not applying for a mortgage in Detroit, Ohio or Stockton, CA.

Answer 3

As long as your current balance on your credit cards is 30% or less of the actual amount you have to spend, your credit scores should improve about 10 points per month.  The important thing is to pay your rent on time every time with a personal check so you can later prove you are a responsible tenant.  Once you have your current debts (seemed like they were old collections?) paid off, you should qualify for an FHA loan.  Call a local mortgage company.  They should be able to help you.  A bank will want to see perfect credit histroy and quite a bit of it.  A mortgage Company works with lenders who specialize in FHA loan requirements.  You may already qualify now by way of manual underwriting.  Only a mortgage Company will be able to help you at this point.  Best of luck!

Answer 4

a 580 FICO score and 12 months on-time rental history qualifies you for a 5% down FHA loan pretty much anywhere.  FHA actually does not have credit score guidelines, but in today's mortgage market most lenders are asking to see the 580 score first.  Google "FHA 580 fico" to read tons more about it.

Answer 5

It will take AT LEAST three years of perfect credit behavior.