Do you need to work on your credit before applying for an FHA home loan? If you are worried that your FICO scores or credit history might not be good enough to be approved for a home loan, keep reading.
Prepare For Your FHA Home Loan Application As Early As Possible
One of the most important things you can do to start working on credit repair or just getting ready for the home loan in general is to start looking at your credit reports as early as possible.
It will take time to improve a credit rating and credit history-do not delay! The earlier you start working on your credit issues, the better off you will be at loan application time.
Work On Your Credit Yourself
Yes, you can pay a third party to get advice and help with credit issues, but much of what must be done can be accomplished by the borrower.
You don’t need to pay a third party to improve your credit with on-time payments, paying down the balances on your credit cards to below 50% or lower, etc.
Beware third parties who offer to “repair” your credit by claiming to remove negative information from your credit report.
It’s one thing for the borrower to contest old, outdated, or inaccurate information on a credit report (and that is something the borrower can do on her or his own without paying a third party) but it is another claim entirely to be able to remove ACCURATE negative information.
Accurate negative information that is not out-of-date (according to federal or state law, credit reporting standards and/or creditor standards for credit information) will remain on your credit report no matter what a third party may promise you.
Make On-Time Payments For One Year Before Applying For An FHA Home Loan Or Refinance Loan
Those who come to the FHA home loan application process with less than 12 months of on-time payments on all financial obligations risk being turned down for a home loan. Work on your credit by paying on time, every time and especially in the 12 months before you apply for an FHA mortgage.
These things can help you, the borrower, improve credit without resorting to paying a third party. Improving your credit takes time, and that’s without having to contest items on your credit report such as evidence of identity theft, inaccurate information, someone else’s credit information put into your file my mistake, etc.
FHA home loan FICO score requirements are more forgiving that some conventional loans, but lender standards will also apply. It’s a very good idea to learn what lender FICO score rules are for your chosen FHA lender that might exceed FHA loan standards where applicable.