In order to be pre-approved for a mortgage YOU MUST HAVE A CREDIT SCORE between 640-850. If your score is lower than this then the following actions can be taken in order to achieve this score:
- No late payments on any existing accounts (especially in the last 12 months). TIME HEALS EVERYTHING!
- If you do not have any established credit then you should do the following immediately: open a revolving credit card with a credit balance of $300-$500 and charge only $10-$50/month. Be sure to pay the card off and on-time every month. After you pay the card off, reuse it again spending no more than $50. After a few months your score will start to go UP! If you don't have any credit at all then I would suggest that you try and open at least 2 accounts. Below are a couple links for secured credit cards. When you open the link, be sure to follow the directions for a secured card and apply online. Both of these companies report the cards to the credit bureaus. www.capitalone.com, https://www.wellsfargo.com/credit_cards/secured.
- Another thing you can be doing is pay your rent with a check and be sure you are paying it on time every month. You will need to provide your loan officer with 12 months canceled rent checks. If you already are doing this - Great!
- All your collections accounts must be paid off (settled for less is ok).
In order to be pre-approved for a mortgage you must also have at least 4 credit references for the last 12 months (12 months canceled rent checks can be counted as 1). Any credit cards or loans that appear on your credit report that you are actively paying for the last 12 months will count. If you do not have at least 4 tradelines you can give us "alternative" credit references. Alternative credit means you have to be actively paying something on time for the last 12 months.
The following credit references are acceptable:
- Letter from your Auto Insurance company stating you have never been more than 30 days late in the last 12 months
- Utility Company
- Your Cell Phone Provider
- Day Care Agency
If you are unable to get a letter then you may be able to provide your loan officer with your most current statement.
Do you have more questions or ready to start the pre-approval process?