Lenders have ways around credit problems

ROBERT J. BRUSS

Inman News

Are you less than perfect about paying your bills on time? Or maybe you pay your rent, utilities and other bills with cash or money orders so you have no credit record.

If that's your problem, you can still buy a house or condo.

Thanks to innovative outreach home mortgage programs from Fannie Mae and other major home loan lenders, if you have a reliable source of income, you can probably buy a home. Virtually every mortgage lender has a special home loan program for borrowers with credit problems. The interest rate might not be the lowest available, but mortgage money is abundantly available.

If you're not sure what is in your credit report, or you don't know your FICO (Fair, Isaac and Co.) credit score, which most mortgage lenders use to rate your credit, the easiest source to learn this information is at www.myfico.com. For $12.95 you will receive your credit report, FICO score and suggestions on how to improve your FICO score.

At www.equifax.com, you can check your credit reports at all three major credit bureaus for an additional fee.

Fannie Mae and Freddie Mac, the nation's largest home loan lenders in the secondary mortgage market, use computerized credit scoring programs to instantly approve mortgage borrowers for home loans up to $333,700.

FICO scores range between 450 and 850. The higher your FICO score, the better. A FICO score above 700 is almost always a "slam dunk" approval at the lowest mortgage interest rate. Nationwide, the average FICO score is 678.

After you obtain your credit report and FICO score, read it. If you discover any errors, contact the credit bureau immediately.

If you are unemployed, on welfare, were recently rejected for credit, were a fraud victim or were told a collection agency has or will report negative credit information about you, you are entitled to a free credit report.

After checking your credit report and FICO score, it's time to apply for a home loan.

The next step is to get a written mortgage pre-approval letter or certificate from an actual lender.

Credit Bureaus

• Equifax, P.O. Box 740241, Atlanta, GA 30374; phone (800) 685-1111; www.equifax.com.

• Experian (formerly TRW), P.O. Box 949, Allen, TX 75013-0949; phone (888) 397-3742; www.experian.com.

• Trans Union, P.O. Box 290, Springfield, PA 19064-0390; phone (800) 888-4213; www.tuc.com.

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