Low FICO Loans
When you apply for a mortgage loan, your credit score will either be your friend or your enemy. This is why most people are smart enough to start building good credit long before they need a mortgage loan. Having a low score isn’t going to prevent you from getting the loan in the end but is is going to hike up your interest rates. However, there is an option of getting a mortgage loan with no credit at all. But, Before you apply for a no-FICO mortgage, it’s essential that you understand how they work and how you can qualify.
Purpose of Credit Scoring
Without credit reports and credit scoring, potential lenders would be unable to assess an applicant’s creditworthiness. Credit reports contain very detailed information about our credit history. For example, the length of credit history, number of credit accounts, outstanding balances, etc. Along with creditor information, reports also contain a three digit number. This is the FICO score. Credit scores range from 300 to 850. Higher scores obviously means better credit.
How Mortgage Loan is Affected By Credit Scores
A long time ago, getting a mortgage loan with poor credit was impossible. But, now lenders and other institutions have started to offer flexible programs that make you able to qualify yourself and your family for the loan. These mortgage loans are designed especially for those families and individuals with poor credit.
For the most part bad credit means you have negative hits against you on your credit report. Negative hits that hurt you slightly are things like inquiries on your credit, a late payment, etc. Things that might affect your credit a little more significantly are things like foreclosures or bankruptcies on your account. Luckily, there are other methods of getting approved for loans. The lenders will still always look at your FICO score but it won’t play quite as large of a role.
Home Loans With No Credit?
If you have little or no credit, you might qualify for this type of a home loan. I most cases, home buyers earn quite a large income so that they can afford a home. But, in some instances, due to past credit history, even if you make enough to purchase a home now, a bank may not qualify you for the loan but will rather ask that you wait for the credit to return to the amount where they can approve you.
ABC Loan Guide
Many mortgage lenders offer these sorts of loans. However, homebuyers must meet certain criteria. For example, most lenders will only finance 70% or 80% on a no credit score loan, thus the homebuyer must have a down payment of approximately 20% – 30%. Secondly, most lenders require full documentation on these loans. Thus, homebuyers needing a no doc or stated income loan may not qualify.
Filed under business by on Oct 28th, 2009. 
