Upper Marlboro MD Real Estate: The Evolving Times of Credit

During my six years as a real estate agent, I have seen the role credit plays in determining the buyer's worthiness to get a home loan. However, what interests me is how the requirements for credit worthy applicants have changed over time. Yes, you still have to have a solid payment history, but there was a time when low credit score buyers had an excellent chance of getting a home loan just like high credit score buyers.

Now, I definitely state my claim to working with low credit score buyers. My victory is that I got these buyers into a home; however, this was some years back. I remember working with clients with credit scores in the 500's. Those days have passed and the sight of such a credit score today is only a reminder of what used to be.

Now, those low credit score clients did use FHA for their home loans. The one thing about FHA is that it has been consistently flexible in it's approach to credit. FHA has seemed to look at the glass half full instead of half empty. FHA looks at the total picture and potential of the client providing more wiggle room in a buyer's situation. According to FHA Home Loans, FHA will "allow minor past credit issues, as long as there is a reasonable reason why there was an issue." FHA will look mostly at the last two years of your credit history. According to FHA Home Loans, "if there are some credit issues, they may be able to overcome them with sufficient explanations and supporting document of why the issues occurred." Loss of job, job transfer, and serious illness are examples. I recall, one buyer in particular who had a credit score in the low 500's who had a great work history and income, but had some blemishes on his credit report. Through explanations that made sense, he was able to qualify for a home loan and is now living in a wonderful condo in Washington, DC. With this said, this is why many buyers today are still going with FHA as opposed to conventional loans.

Through continued partnerships with lenders, the message I hear is that banks are requiring a minimum credit score of 640. Although in a recent sales meeting, the loan offer making the presentation said that his bank will go as low as 620. It seems that banks are still calling the shots for the most part and setting the foundation for what they want as buyers walk through their doors. However, what one bank might not do, there's probably a bank somewhere else that will.

Thus, it is extremely important for potential buyers to regularly check their credit and know what's on their credit report. You should know all three scores before making an application for a home loan. While this sounds ideal, it is in the buyer's interest to have certainty that the home loan application has a great chance of being approved and going through. Many buyers still don't check their credit up front and wait to do this when they decide to purchase a home. Buyers should already know whether their credit is worthy and if their are some things on their credit report that may need to be repaired before they can buy a home. The worst thing is to go and apply for a home loan and not get approved. However, as I continue to work with low credit score buyers, I connect them to a lender who can give them a plan of action to correct their credit and make it worthy to get a home loan. It just means buyers with low credit scores today will have to wait a little longer to buy a home.

As an Upper Marlboro, MD real estate agent, I feel that I specialize in low credit score clients. Sometimes I feel that it's my greater work to help these types of buyers get into homes. It seems that they continue to come my way and I have to work with them with the same zest and zeal I have with my buyers who are ready to buy right now. To speak with me about buying, selling, or renting, contact me directly at 240-547-8104. You can also register with me on my website at www.uppermarlbormdrealtor.com or www.agentskyshooter.com. Thanks from Timothy Johnson.