Consumer Credit

Are you in the market to buy a home?  Do you have bad credit with low FICO scores?  We have written previously about specific recommendation on improving your credit score.  However, if you have found a property and are looking to purchase there are some options that would make it more appealing for a lender to underwrite your purchase:

1) Down Payment:  If you are able to increase your down payment 20 to 30% or higher,this will make your loan much more attractive when and if your bank decides to resell it.

2) Co-Signer:  Identify a credit-worthy co-signer to sign the loan with you as the main borrower!  This will lesson the impact of your bad credit since the loan will be underwritten with the co-Signers credit history. In this case, after about 12 months where you have documented consistent on-time payments, you should be able to refinance the mortgage and remove this person from the title and the loan.

3) Additional Assets:  Document all of your valuable assets including Stocks and bonds and 401k fund to help bank recognized that you have some recoverable assets in case your home mortgage falls into trouble.   This could be additional real estate which could be pledged as a collateral for this purchase.

4) Reduce your Debt Ratio:  30-35% of your credit score depends on the ratio of your credit card limit and the amount of revolving balance on that specific credit card. Reducing this limit below 30% should increase your FICO score within a few months.