LENDER: “We require a minimum 640 FICO score to extend a mortgage. And at 680, you’ll get a better interest rate.”
What they didn’t tell you, is that you could qualify for a conventional or FHA loan with even a 620 score. The declining lender either has an “overlay” (which means their conventional loan risk tolerance is less than other lenders), and/or they just don’t offer FHA loans.
There are many national, reputable wholesale lenders who will underwrite standard FHA mortgages at a 580 credit score – and will even accept a lower credit score if you have at least a 10% down payment.
But – What if you:
- still don’t quite meet minimum credit score requirements?
- just missed the next higher FICO score level – which could yield a better interest rate?
For nominal cost, a credit agency can run a sensitivity inquiry to quickly tell you which credit cards need to be paid down and by how much – before a credit bureau increases your score. Once you receive a statement from your creditor evidencing your pay-down, send it to the credit bureaus for a credit score adjustment (but this can easily take 30-60 days).
Alternatively, you could work with a reliable credit agency to expedite this process (usually no more than 5 business days). Under this “Rapid Rescore” process, you are notified once your improved scores are posted, and a new credit report could then be presented to your lender so that you can get on with your mortgage!
Here’s the Point: After paying down a credit card, there are “Rapid Re-Score” programs to arrange for the credit bureaus to adjust your credit score within 5 business days.