A credit score of 580 is a good thing or bad? Experts suggest that credit scores above 740 keep the troubles away. Now, the credit score of 580 verges on the average mark. Lenders tend to turn their service away from the borrowers with unfavorable credit. Others in the market are happy to proceed with subprime loans – this is only applicable if the credit range remains somewhere around the fair mark. There is a twist: you need to prepare for a high mortgage rate.
A low credit score is challenging, and it often eliminates your dream of homeownership. 27% of home buyers with credit scores in the fair range have the risk of delinquency. You can go on with the process of purchasing a home as long as you have the will to increase scores. Pulling up FICO scores is a gradual and continual process. There are many ideas on how to improve the score.
For this reason, buying a house with 580 credit score in Houston is possible. Following are the mortgage programs you should keep in mind.
VA Loans for Veterans and Active-duty Military Members
The U.S. Department of Veterans Affairs upholds the welfare of military-affiliated members, veterans, and eligible spouses. The loan program does not need a down payment or mortgage insurance. Also, the mortgage can supply the lowest interest rates in the market.
Now, the Department of VA does not fix a minimum credit score. It is the lenders who set the credit score requirement at 550. This type of loan does not come with risk-based pricing adjustments. This indicates the fact that low scores can earn you reasonable deals.
FHA Loans for First-time Homebuyers in Houston
The VA loans are not applicable for every type of borrower, unlike FHA loans. You may not get the advantage of zero down payment, but you can put down 3.5% of the loan value. From competitive rates to easy eligibility requirements, FHA loan programs are quite helpful.
The FHA loans are easy to obtain and the past history of bankruptcy or foreclosure is allowed. You can also expect low closing costs along with low mortgage premiums. FHA loans aim to make achieving homeownership easier and possible for many borrowers with 580 credit scores.
Improve Credit Scores for Better Deals
You cannot rebuild your credit score overnight, it is a time-consuming process. You can start with a debt-management plan for reducing an outstanding balance to zero. Working on a repayment schedule and closing due accounts can be of major help. Paying bills, after all, is a healthy choice to sort out further issues. Experts think that nothing helps better than paying bills regularly. In this context, automatic payments work the best.
In the end, buying a house with 580 credit score can be a piece of cake – all you need to do is keep an eye on the credit report. Of course, not every FHA or VA lender will be ready to work with 580 credit scores. Research and find out the perfect lender for you.