Credit Score Under 580?
If your credit score is below 580,
purchasing a home or refinancing can seem
almost hopeless with today’s mortgage
However, several lenders available through
our eMortgage community do offer low
interest rate programs for borrowers with
credit scores less than 580.
For emergencies or urgently required
service, please call:
1-631-486-3735 to be directed to a mortgage specialist "on call".
If your mortgage has been paid mostly on
time over the past 12 months, (for example:
not more than 29 days late), low interest
rates would likely be available for you,
same as if your score were actually above
580. If you had a time period during the
past year that caused one or more late
payments, you would need a strong
explanation (“circumstances beyond your
control”) in order to qualify for a
reasonable interest rate program with a low
During the first quarter of 2007, 580
credit score requirements started becoming
the new recognized “cut off” for many
mortgage programs. Prior to that scores
less than 500 were the cut off.
If you’ve been having trouble making your
mortgage payments on time, and do not
explain and prove “circumstances beyond your
control”, programs rates tend to be effected
by lender risk calculations. These programs
carry greater rates and closing costs.
If your current mortgage is in foreclosure,
there is a lender program that requires a
minimum property value of $250,000, charges
interest rates somewhere around 13%. This
program also has some substantial
For many borrowers, a program like this
might make sense. In these cases it might
be better to work on your credit with an
experienced credit consultant to enhance
your score; and then try to refinance.
1. If you are running out of time and don’t
have time to work on your credit, such
program might make sense.
2. If the refinance would be paying off
debt showing on your credit report, enough
so that your credit score would increase
above the 580 mark, and if you can
temporarily handle the monthly payments then
perhaps such program might make sense.
Nevertheless, one should keep in mind that
enough equity would need to be remaining in
the property to satisfy the pre-payment
penalty upon paying this mortgage off.
A frequent question coming up is about:
Previous lender programs that once offered
programs for homeowner credit scores under
580 which provided terms with more
preferable rates a borrower’s mortgage
payments were NOT showing up on their credit
report. These programs seemed to have dried
up and no longer known by our eMortgage
community. The lender underwriting
rationale of these programs was as follows:
There has been talk about these programs
coming back. At a quick glance, these
underwriting guidelines did not make sense
to some, in many ways they actually did make
a lot of sense. There are many people that
pay their mortgage on time every month, but
for other reasons have credit scores below
580. They pay their mortgage like clock work
every month and have been doing so for
Only about 2% of the entire U.S. population
have credit scores below 580. The mortgage
program creators simplified their life once
again, and set a new cut off to compensate
an ailing industry.
Moreover, the reason these programs may come
back is: If someone’s score is less than
580, but mortgage payments have been made on
time, and if the mortgage is not being
reported to credit, there is good reason to
consider that homeowner’s case. This is
because, if those timely mortgage payments
were showing up on the credit report, they
would become part of the mathematical
algorithm that is used to calculate the
credit score and the credit score would
likely rise above the 580 mark.
If you are thinking about doing some work on
your credit, consider this. If the score is
under 580; but you’ve for the most part,
been paying your mortgage one time; and if
the mortgage company is reporting you
payments on your credit report, obviously,
there are other things on the credit report
causing the low score.
Often you can focus on a few items for a
quick enhancement to bump your score above
580. Of course, repairing your own credit
can also be an infuriating job.
Unfortunately, most folks are not aware of
which items are most significant to correct;
nor which can effectively be corrected.
There are various tools and informational
web pages offered by the 3 major credit
bureaus Experian, Equifax and Transunion
that can help. Having an experienced credit
professional review you report is often a
good idea. You might want to seek some
advice from a credit professional that
understands your objectives; and whom may be
able to pin point and help you correct a
select few items for a simple push on your
score to move it up above 580.