A credit score helps lenders determine borrower risk. The better your credit, the lower the risk; which can help you qualify for a lower interest rate. FICO is the credit score standard for a home mortgage. FICO takes your mid-range score from the three primary credit bureaus: Experian, Equifax and TransUnion. Each bureau provides a credit score up to 850 based on several reporting criteria (see images below for a breakdown of a credit score).

A low FICO credit score could be due to credit problems, like late payments or bankruptcy. It could also be low if you have little or no credit history. In regards to a first-time buyer, good credit history with smaller purchases like a credit card or car loan helps mortgage lenders understand how you handle your financial obligations.

Bad credit can be a big roadblock to buying a home. Repairing and building credit can take time. Don’t wait and guess where you are or what you need to do to build or repair your credit. Your Intercap loan officer can let you know exactly where you stand and where you need to be to qualify for a home loan. Making a plan is the best way to overcome low credit road blocks.

In general, you’ll need to wait two years after a foreclosure or short sale to qualify for a VA loan, three years to get an FHA or USDA loan, and seven years to qualify for a conventional loan. The wait to qualify for a home loan after the discharge of a Chapter 13 bankruptcy could be even faster. Contact your Intercap loan officer to find out exactly when you can qualify and what you may need to do to buy your next home.