500 Fico score

thisdj84 · Joined: 12 Feb 2007 Posts: 3 Location: Sioux Falls, SD

Does anyone know of lenders that will do 100% financing for borrowers that have low 500 scores.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

That would depend on why they are low 500's. I've done FHA loans for people low 500's several times. Just depends on the circumstances.

ken(TX) · Joined: 23 Sep 2005 Posts: 184 Location: Dallas, TX

Back in the old days, credit scores were rarely used by non-prime, non-conventional mortgage lenders. Credit scores only ease in automation but don't always paint a clear picture of creditworthiness.

As Haplo said, what is your credit history...not your credit score.

thisdj84 · Joined: 12 Feb 2007 Posts: 3 Location: Sioux Falls, SD

they filed a bankruptcy and was discharged 18 months ago. The credit is not updated correctly so scores are suffering. they have 543 & 561 mid scores. since BK they have perfect credit history (3 trades)

ken(TX) · Joined: 23 Sep 2005 Posts: 184 Location: Dallas, TX

If everything was discharged through the Bankruptcy and they have no new "bad" credit then an FHA loan should be available. it's where I would start for sure.

Ken

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

well, the 'guideline' on FHA is 24 months. So, depending on the circumstances of the BK (I.e. was it extenuating circumstances or financial mismanagement?) it will most often be stuck with the 24 months.

Not always, but it's gotta be a pretty good reason usually for it to work through, or make a whole lotta sense. (Like, perfect credit before/after, low ltvs, low ratios, etc.) Even sometimes when it makes sense it may not work out, if it was for financial mismanagement.

But yeah, 2 years and it'd be a piece of cake. Just verifications on the debts that were discharged and voila.

m2c · Joined: 03 Aug 2005 Posts: 937

I’ve seen DU issue an “approve/eligible” on Flex 100s with borrower just over a year out. Nearly fainted when I saw those findings! Remember Fannie does NOT use FICOs but MI companies do. Virtually impossible to MI these days with a FICO below 575 and rates are brutal under 620.

I’d say go for a loan-level exception if you cannot get through DU and you have a case to make. BUT … your applicant needs to contest with repositories to get over the MI problem.