Common questions about credit, answered by Mike Swaleh.
What credit score do I need?
There is no single answer – requirements differ by program, and there are options across a much wider range of scores than most people expect. Rather than aiming at a number, the useful step is having Mike look at your actual credit and tell you which doors are open. Lower than you would like does not mean no.
Will checking my credit hurt my score?
A mortgage credit check is typically a hard inquiry and can affect a score modestly. Scoring models generally treat multiple mortgage inquiries within a short shopping window as a single inquiry, so comparing lenders does not stack up damage. Mike will always get your permission before pulling anything.
Why is my credit score different from the one on my app?
Mortgage lenders use mortgage-specific scoring models and pull all three bureaus, which usually produces a different number from the free consumer apps. It is not an error and it is very common. With three scores, lenders typically use the middle one; with two borrowers, usually the lower of the two middles.
Can I get a mortgage with bad credit?
Often yes. Different programs tolerate different credit profiles, and some are designed specifically for buyers rebuilding. I will not tell you your credit is too low, because that is not mine to judge and it is frequently wrong. Mike can look at the actual report and tell you where you stand.
What should I avoid doing before closing?
Do not open new credit, close old accounts, finance a car, change jobs without telling your loan officer, or make large deposits you cannot document. Any of those can change the decision on a file that was already approved. If something unavoidable comes up, tell Mike before you do it, not after.
How can I improve my score before applying?
Generally: pay on time, bring balances down relative to limits, and leave old accounts open. One thing worth knowing – paying down a small balance with a large minimum payment sometimes helps a mortgage file more than paying down a large balance with a small one. That is worth a conversation with Mike before you spend the money.
Do medical collections count against me?
Medical collections are treated differently from other collections under current scoring models, and how they affect a mortgage file depends on the program. Worth having Mike look at the actual report rather than assuming the worst.
Do we both need good credit if we buy together?
Lenders typically use the lower of the two middle scores when there are two borrowers, so the weaker profile does carry weight. There are sometimes structures that work around it, including applying with one borrower where the income supports it. That is a real conversation with Mike, not a rule of thumb.
Do I need to be debt free before buying?
No. Lenders look at your monthly debt payments relative to your income, not at whether you have debt at all. Sometimes paying off a specific debt helps a file materially, and sometimes it just drains the cash you need for the down payment. Mike can tell you which is which before you do anything.
Does a bankruptcy or foreclosure disqualify me forever?
No. Waiting periods apply and they vary by program and by circumstance, and they are frequently shorter than people assume. There are also cases where documented hardship shortens them further. Rather than guessing at years, it is worth having Mike check where you actually sit.
Mike Swaleh, Area Manager · NMLS #739145 · Fairway Independent Mortgage Corporation, NMLS Entity ID #2289
436 Lincoln Boulevard, Suite 105, Lincoln, CA 95648 · mswaleh@fairwaymc.com · Licensed in AZ, CA, CO, FL, GA, IL, KY, MO, NV, NC, OR, SC, TN, TX, WA
This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Fairway is not affiliated with any government agencies. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, License No 41DBO-78367.
Equal Housing Opportunity. Verify licensing at nmlsconsumeraccess.org
