Up until now any person trying to qualify for a FHA loan would need a credit score of at least 620. Now that has all changed. Once again the lending industry is making it tougher and tougher to get approved for a new home loan. As of September 14th 2009, anyone looking to qualify for a new FHA loan will be required to have a least a 640 credit score of higher. This requirement doesn’t come from HUD or FHA, but from the lenders and investors. Now 20 credit points higher isn’t that big of deal, but it can be if you’re trying to buy a house and you’re sitting with a credit score of 622. If anyone is facing this problem, they should follow some quick credit score clean up tips.
First, if you have multiple credit cards with balances, try paying one off at a time rather than spreading the money out evenly. Pick one card to pay off and pay the minimum amounts on the others. When that card is paid off, move on to the next one. A big factor in determining your credit is the is the percentage of your available credit. Stay current with all payments. No matter how hard it is, make sure you don’t skip a payment on any of your debts. Whatever you do, try to make at least the min payment. Defaulting on a payment will take a hit to your credit and that’s the last thing someone will need when trying to qualify for a new loan. Other things you can do is to check your credit report to see if there are any unknown delinquencies. This is a very common problem. If there is anything that is incorrect, you should always dispute with all three credit bureaus. By law an investigation will take place within 30 days. Also, make sure you don’t close any unused accounts; many people make this mistake all the time thinking that it will improve their FICO score when it can actually harm it.
Doing all these things can definitely up your credit score and hopefully move you up past a 640 score so when you go to get a new FHA loan you won’t have any problems getting qualified.
