If you have started your homework, you would know a little bit about credit scores by now. Yes, a three-digit number refers to your state of being creditworthy at one go. The number does not signify your overall financial landscape. But mortgage lenders can start the basic process of pre-approval from right here. As a borrower, you would be surprised to learn one thing. The credit score you see might differ from a lender’s. So, how do you get through the mortgage application process with your bad credit and less hassle?
If you have a comprehensive knowledge of how lenders see the FICO scores, the degree of struggle goes down. Credit scores are layered. What many borrowers do not know is that various versions of credit scores are available. When you are preparing for the home loan, you need to monitor the credit. The mortgage lenders for low credit scores in Houston also start off the process by checking where you stand. So, you cannot see what a lender sees. It is a fantastic idea to figure out every side of your creditworthiness.
As you are worried about your low score, you need to go through this article. The article explains how lenders use credit scores during the application process. Let’s take a look below.
How Lenders See the Credit Scores
The scores you acquire from the credit bureaus are not what the lenders see. Credit scores acquired from the bureaus can only give you a perspective on your financial situation. Now, the mortgage lenders for low credit collect the scores that come with disclaimers. Furthermore, many borrowers often buy a report with generic information. Lenders always have their eyes on the specific credit utilizations. So, the score pulled by the lender might be slightly different. Check the credit agencies which offer the industry-based FICO scores.
Credit Scores that are Utilized
Now, what are the usable credit scores? The FICO scores should be solid and accurate information. When the credit score does not paint the blemish-free picture, it is considered unusable. Mortgage lenders for bad credit scores in Houston always watch out for two things,
- Three different scores because the average number gets picked.
- If two of the FICO scores are similar, lenders only use that number.
For example, a lender found out a borrower has two repeated scores: 600, 620, and 620. The loan officer will have to choose 620. Regardless of the score being higher or lower than the other, the lender has to pick the repeated number.
Borrowers with low credit often do not have any score available. Then the lenders consider the lower score as long as it is usable. Also, find out the loan programs you are eligible for. FHA and VA loans generally make the cut. The lowest credit benchmark for FHA is 500. Additionally, veterans and active-duty service members can apply for the VA loans with 550 scores. So, start hunting for the ideal loan and get ready to choose a lender for your low credit.