Are you looking to purchase a home but have a credit score of 615? Don’t worry, there are mortgage lenders that will work with you to secure a loan for your dream home. While having a credit score of 615 may not be considered excellent, it is still possible to obtain a mortgage. In this article, we will explore some of the options available to you as a borrower with a 615 credit score.
What is a Credit Score?
A credit score is a numerical representation of your creditworthiness. It is calculated based on your credit history and can range from 300 to 850. The higher your credit score, the better your creditworthiness is considered to be. A score of 615 is considered fair, which may limit your options for obtaining a mortgage.
Traditional Lenders
Traditional lenders, such as banks and credit unions, may be hesitant to lend to borrowers with a credit score of 615. However, if you have a good relationship with your bank or credit union, they may be more willing to work with you. It is important to note that traditional lenders typically require a higher credit score and may have stricter lending requirements.
Non-Traditional Lenders
Non-traditional lenders may be more willing to work with borrowers who have a lower credit score. These lenders include online lenders, peer-to-peer lenders, and alternative lenders. While these lenders may have higher interest rates, they may be a viable option for borrowers with a 615 credit score.
FHA Loans
The Federal Housing Administration (FHA) offers loans to borrowers with lower credit scores. FHA loans are backed by the government and have more lenient lending requirements. Borrowers with a credit score of 580 or higher may be eligible for an FHA loan with a down payment as low as 3.5%. However, borrowers with a credit score between 500 and 579 may still be eligible for an FHA loan with a down payment of 10%.
VA Loans
VA loans are available to active-duty military members, veterans, and their spouses. VA loans are backed by the Department of Veterans Affairs and have more lenient lending requirements. Borrowers with a credit score of 620 or higher may be eligible for a VA loan with no down payment required.
USDA Loans
The United States Department of Agriculture (USDA) offers loans to borrowers in rural areas who meet certain income requirements. USDA loans are backed by the government and have more lenient lending requirements. Borrowers with a credit score of 640 or higher may be eligible for a USDA loan with no down payment required.
Improving Your Credit Score
If you are unable to secure a mortgage with a credit score of 615, there are steps you can take to improve your credit score. These include paying your bills on time, paying off outstanding debt, and disputing any errors on your credit report. Improving your credit score can not only help you secure a mortgage, but it can also lead to better interest rates and loan terms.
Conclusion
While having a credit score of 615 may limit your options for obtaining a mortgage, there are still lenders that will work with you. Traditional lenders may be hesitant to lend to you, but non-traditional lenders, FHA loans, VA loans, and USDA loans may be viable options. If you are unable to secure a mortgage, taking steps to improve your credit score can help you in the long run. Remember to do your research and shop around for the best loan terms and interest rates.