No FICO Score Home Loans

If you plan to apply for a mortgage loan, you should be expecting to have a great credit score. This will help you significantly. However, some people who didn’t think to build up their credit prior to applying for a loan, may be up the creek without a paddle. However, it doesn’t mean you can’t get the loan. There is such thing as a no-FICO home loan but before you go applying for this, there are some thing that you’ll need to understand.

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 Credit Scores Affect Mortgage Loan Approvals

A while back, it was pretty much impossible for an individual to get approved for a mortgage loan if he/she had bad credit. Now, many institutions had bank lenders have provided a way for those with bad credit to still be approved. now, it is possible for you and your family to get that home loan you have waited so long for.

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.

What are No Credit Score Home Loans?

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.

Try an 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.

Author: Caton Jensen SBFC Law Group Home SBFC Law Group Homepage

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