One area of credit to be very careful with when preparing for a FHA home loan in California is collection accounts that can appear on your credit. Collections can be very sneaky and just appear on your credit one day without you knowledge with an account you forgot about long ago. You could have an old cell phone account or gas and electric account that has say only $30 remaining that was unpaid, and that creditor may no longer have a current address to send you the bill. Then one day you can wake up and check your credit and your score has dropped 100 points because this collection has been reported to your credit.
For a FHA loan in California, your FHA loan credit score has to be at least 620 to qualify for a FHA loan without major difficulties. There are three credit bureaus, FHA loan requirements take the middle of the three credit scores and consider that for your FHA loan approval. And if you have a small collection account appear on your credit report, it can literally drop you score from 700 to 600 overnight and disqualify you for FHA loan approval. So be very careful and check your credit a few times a year to see if any derogatory items have appeared on your credit report hurting your score.
There are some things you can do if you see a collection appear on your report and you are attempting to qualify for a FHA loan:
- Do not pay the collection off as this can actually hurt your score
- Try to first call the creditor who put the collection on your account and ask them to delete it off your credit report. It’s important they delete it off your credit report, not just mark it paid.
So I hope this article helps you be careful about collection accounts when preparing for a FHA loan in California. If you have any questions about getting approved for a FHA loan in California send us an email at homeloan8@gmail.com or give us a call at 858-922-7899.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (FHA, VA, USDA and conventional loan specialist)
858-922-7899
Related posts:
You must log in to post a comment.