Boosting Credit for Mortgages & Tenants
- Adam Garrett
- Jul 17, 2024
- 13 min read
Updated: Jun 9
While there are some exceptions, your credit score has a very high impact on most mortgages & your options as a tenant. Prior to taking out a mortgage or seeking out a rental property, get educated on your credit.
Educate Yourself on Credit as it Pertains to Mortgages:
When to boost your score? Especially below 740
If your credit is below 740 & you are, look at ways to boost your score, depending on which lender you are working with. In some cases, lenders offer their max credit to those with scores 720 and above, while other lenders offer their max rates to those with scores of 740 and above, and some might even have a 760+ threshold. While it won't stop you from purchasing a home (especially if prices are increasing or your time in an area is dwindling before you move), don't be satisfied with 700; look at ways to boost your score.
What's the minimum score to purchase? That heavily depends on the institution/loan type, but options are most limited if you have <580
If your credit is below 580, >90% of lenders wont't be able to give you a mortgage until your credit rating is higher. Some lenders have minimum scores of 620, & some have higher minimums like 660 or even 700 on certain loan types. Different loans with the same lender can have higher minimums.
Any mortgage options below 580 & for those with a score? Yes
There are some lenders that will go below 580, but you will typically need a larger downpayment if you go below 580, such as 10% or 20%, &/or be charged a higher interest rate.
There is also 1 viable program to buy where credit score is not considered, NACA.com, but while the numbers are great (i.e. no closing costs, only prepaids, and no down payment, with a below market rate for households below median income for the MSA & meeting other qualifications), they involve more hassle than a typical program, take 3-6 months before pre-approval typically, and aren't for the faint of heart.
NACA is 1 of many mortgage options for scores below 580 & those without a score. USDA Direct is another.
Other <580 examples include:
Novus Home Mortgage: 500+ Credit Score VA Loans & FHA 10% Down Loans
Carrington Mortgage: 500+ Credit Score VA Loans, ARM loans, & FHA 10% Down Loans
Guild Mortgage: 540+ Credit Score
Sebonic Financial: 550+ FHA Loans
Freedom Mortgage: 550+ VA & FHA LoansNovus Home Mortgage
Carrington Mortgage
Other no-credit loans include:
Churchill Mortgage: Traditional No Credit Loans
HSBC: No Credit Loans for Foreigners
Guild Mortgage: Traditional No Credit Loans
Novus Home Mortgage: Traditional & Foreigner No Credit Loans
While the article linked goes into more detail, here are the basics:
I. Get Your Finances & Credit in Order:
Clean Up Your Credit
If Your Credit Score is Below 720, Use Debit Cards
Have an Emergency Fund
Have Funds for a Double Security Deposit
Avoid Financed Discretionary Spending that Isn't Geared Toward Wealth Building
If You Have Debt, Use the Debt Snowball
Seek Rental Assistance
Build Credit Via Rent
II. Prepare for tenancy in non-financial/credit capacities:
Some Rules Might not be Written in Stone, Especially When Strategies Below are Combined
Consider Prepaid Rent if You Have $
Consider a Guarantor or Co-Signer
Consider a Higher Monthly Rate than the Advertised Rate
Look for Unwanted Properties
Consider Craigslist, AirBNB, & the No Credit Filter on MyHousingSearch
Establish a Spreadsheet for Rental Policies by Company &/or Address
Check Whether You Should Rent or Buy
Seek a Flexible Landlord
Have Good References
If Renting With Someone Else, Have The One With The Best Score Apply if Landlord Policies Allow it (Many Don't)
Use a Wide Search Area
Consider a Higher Security Deposit (up to 2 months rent in VA) or an Alternative to a Security Deposit if you Don't Have the Capital for One.
Why boost your score? Save $1,000's, $10's of thousands, or $100's of thousands & boost your purchasing power
Boost your score so that you can save thousands, tens of thousands of dollars, or even more, felt in the short term and long term. By increasing your credit score, you not only save money, but qualify for more.
What other than credit matters for a mortgage?
Credit score is not the only factor in qualifying for a mortgage. The current debts you may be paying, the down payment that you can afford (if applicable), the income that you have, and your sources of income are all factors. There are also other factors like government programs such as down payment assistance grants, special tax incentives, or interest rate reduction programs like the roughly 1% rates that some get with USDA direct loans in places like Smithfield, Gloucester, and parts of York and James City County.
For more details, see:
Where to get free credit scores & user-friendly basic reports?
If you want to start building your credit, it's helpful to know what your credit scores are. You don't need to pay for this service. To get scoring information & credit data more often, register on a paid website or free website that tells you your scores for free.
While the scores of every lender could be different in minor ways, half of the 26 locations for free credit scores long term at least once every few months that I checked were scores that are prone to be very far off of what your lender will be pulling because they use a completely different model.
Experian Options (including 1 that is free regardless of where you bank)
Chase if you have the Chase Slate (& not with other cards where you'll only get the Vantage score)
Experian.com free account (the best Experian option, though every time you sign in they like to ask you if you want to "upgrade" though, which is a paid upgrade)
Wellsfargo.com (if you're an account holder)
Equifax Options
DCU - checking +credit card (both, not either unless you receive direct deposits into your checking) - Equifax Classic Risk Score 2008 (EQ-08).
Huntington Bank (if credit card holder)
Langley Federal (if bank account holder)
Navy Federal (if account holder)
Penfed (if bank account holder)
Transunion Options
Bank of America (if you're an account holder)
Barclays (if you're an account holder)
Discover (if you're an account holder of Discover It or Discover More)
Partners 1st - bank account holders
Walmart Discover card or Walmart credit card
Vantage Scores & Other Scores to Not Pay Much Attention to
1st Advantage Credit Union: Vantage Transunion
Amex (Vantage mostly though there are some examples of true FICO scores depending on the account)
Bayport Credit Union - Vantage Transunion
BB&T - Vantage Equifax
Capital One-Vantage Transunion
Chase - Vantage Experian (unless you have the Chase Slate)
Citi (Bankcard 900 max model - details)
Credit.com (VantageScore 3.0 Experian)
Credit Sesame (VantageScore 3.0 Transunion)
Creditkarma - Vantage Equifax/Transunion
Creditkarma used to publish a FICO score before shifting to the Vantage score model, and for a while, even while it prioritized the Vantage score, if you had the right link, a hidden archive of updated FICO scores was available.
First National Bank Omaha - Experian Bankcard Enhanced FICO score 2008 (EX-08 bankcard enhanced, range of 250-900)
Merrick Bank (Transunion 250-900)
Mint.com-Vantage Transunion
Wallethub-Vantage Transunion
Keep in mind that the score models used often change over time, like they did for Credit Karma.
For more details, go to my page here on free credit scores:
Where to get free weekly full reports?
You can contact each credit bureau in 1 location for a free report each week. Don't worry about damaging your credit score when you are checking your own credit, as it is only a "soft pull" on your credit score. Soft pulls have no impact on your credit score. You can do it all at Annual Credit Report.
Boost Your Credit:
What is in a FICO score?
Per myFICO:
Use Information from Credit Karma
While you shouldn't be relying on the score on Creditkarma, the information on there is still helpful.
Click on Your Transunion Data
From a desktop, click on your Transunion data:
Scroll Down to Credit Factors
You'll want to pay a lot of attention to this view. After going to this view, you can clik on each on Credit Karma to get more details, including a breakdown on which accounts are contributing to the overall #.
Credit Card Use (<1 month)
Credit Card Use is ideally <1%, though 5% doesn't have a major impact vs <1%. It's not just about the overall use either. If you're at 5% overall use, but you're at 50% use on 1 low limit card, it's hurting you more than if you were at 5% use for all of your cards. You'll want to click on Credit Card Use on Credit Karma to get these details.
With this factor, the impact of paying these is felt in typically <1 month from the time that the payment posts to your account.
What Creditkarma doesn't mention is that it's not just about revolving accounts. It's also installment account utilization that impacts your score, though to a much lesser degree. That's why when you pay off a mortgage or car loan, your score may actually go down. When you pay off a credit card, on the other hand, your score should go up as long as you keep using the card and it doesn't go dormant. In myFICO, rather than a "Credit Card Use" category, they have an "amounts owed" category, which is more accurate:
Derogatory Marks (7 years, but sometimes much less if you're proactive)
Ideally you'll want none of these. A collection or a judgment is an example here. It's sometimes best to get on a payment plan if you can't pay these in full if looking to purchase a home soon. Also if you're able to, arranging in writing for them to delete the collection if you pay in full is ideal. If you've paid already or if they refuse, I suggest hiring a credit repair firm to attempt to get those removed from your credit report. If you don't, it could be dragging down your report for years.
"According to the CFPB, collection accounts, including paid and unpaid collections, can stay on your credit report for up to seven years. This includes collections that are recorded when you default on a debt (AI overview to question from CFPB page)."
Credit Age (<1 month)
Credit age is a very slow process to build, but can come down quickly from accounts falling off your credit report years later after they are closed and from the establishing of new accounts.
Total Accounts (<1 month)
Your total accounts isn't actually a factor mentioned by FICO. What FICO mentioned is credit diversity. The more types of accounts you have without problems, (i.e. revolving and installment rather than just 1 or the other) the lower their risks.
Hard Inquiries (1 year)
Hard inquiries stay on your credit report for 2 years, but only count negatively for 1 year.
Repeat the Steps with TransUnion & Experian
After you've reviewed your credit info on one bureau, be sure to look at the other 2. While Creditkarma will give you info on Equifax & Transunion, Experian.com will give you info on Experian.
Warning About Free Credit Sites
Be aware that sometimes the tips on credit reporting websites, such as credit cards to get, etc., are sometimes paid for by advertisers on the site. This can include loans that they recommend, refinancing options, etc. Lots of other online sources have biased reviews paid for by advertisers with these same sorts of companies.
For some good tips on credit, look for multiple sources, especially unbiased ones. I post some of my own credit tips, including credit card suggestions, on my Facebook business page.
If considering purchasing with Adam, meet w/ him freely.
One of the top ways to boost your credit is to schedule a Credit Boosting Meeting with Adam if considering a purchase in his coverage area and considering him as a prospective real estate agent to use. Keep in mind though that while I would consider myself a credit card cashback/rewards expert, I would not consider myself a credit expert, don't have any official certifications, & would just be providing advice. With certain strategies like removing paid-off collections from your credit report, I would be referring you to others & tell you how to go about it. For instance, these companies can purposefully drag their feet to charge you more if they are paid on a monthly basis rather than a per-job basis.
Alternatives for Free Credit Help Beyond Adam
I. US Options:
http://www.debtfreeonline.com/ Some free & paid options.
II. VA Options:
Long lists of paid & free credit help in VA by SCC
III. Local options in SE VA:
Non-profit located in Hampton. See their fees & free options here.
Multiple options through Catholic Charities http://www.needhelppayingbills.com/html/hampton_roads_catholic_chariti.html http://www.needhelppayingbills.com/html/help_paying_debt.html
3. The UP Center in Norfolk
Alternatives for Paid Credit Help Beyond Adam
Lexington Law
I have used them successfully even though I had to prod them to get things done promptly to some degree where they seemed to be intentionally delaying things.
Last I checked (years ago), it's 14.99 to start and $59.95/mo-$139.95/mo starting the first month. If you sign up with a friend or relative, it’s half price the first month for each of you (an unlimited number of people it appears). It took me a little over a month to get 3 paid medical collections removed from all 3 bureaus. In order to expedite the process, I contacted them and asked that they proceed to the next bureaus after they began with the initial bureau. If I had not done that, they may have waited for the first removal to occur prior to ever proceeding to the 2nd collection removal. The letters that they sent were “verification” letters. Essentially the credit bureaus need to verify information in that request. Because it’s easier to just remove the paid collection from my credit report than it is to verify the info, they proceeded in that direction. After a little over a month (& $240), the day that the last credit reporting agency removed my collections, I contacted Lexington to cancel my service with them. Once removed, my scores shot up by about 80 points.
Enroll Online
You can enroll online at
http://www.lexingtonlaw.com/index.php?tid=662.0.19698.
This link will track to my account where I can get a referral bonus and see your progress.
Call in to Enroll
Call Lexington law 1-866-348-8440 (provide my affiliate ID# 19698 to give to their paralegals when you call) This link will track to my account where I can get a referral bonus and see your progress.
Greg Spielman
More expensive for setup but more personal and supposedly better & faster:
302 735 7526
*Usually 399 setup and 99 per month
For my referred clients - $199 setup and 99 per month
4-8 month turnaround for many.
From someone who used to work with this company - “The easiest way to send a customer is to have me call them or have them call and speak to me directly.” Be sure to mention that I referred you, which will do a few things including giving him the ability to add you to my pool where I can see your progress.
“We do not worry about matching Lexington Law (regarding pricing) to be honest because we are better than Lexington Law. Lexington Law takes longer than us, and like you said in some situations they only work on a certain amount of trade lines. For example we will work on all the negative items at the same time, Lexington Law may only do five at a time. The other key element is that every time your client would call in to Lexington Law they could speak to someone different, which most people do not like, because there is no telling how many people will see your credit info, with us they have one counselor and the only time they talk to someone else about their file is billing or when I am out on vacation or something like that.
In closing we challenge all three bureaus at the same time, because not to do that would slow the process down for your client and for you.”
Lender Paid
Steven Carpel 757 921 1387 -
https://www.zillow.com/lender-profile/steven%20carpel/
mortgage lender who I worked with for my own home (I did not use the following program he offers):
He will reimburse the first 4 months of credit boosting company that (National Credit Care) you can pay to clean up your credit. He will give you the $400 for the first 4 months at closing (likely for a minimum $50k loan) if you use him as a lender ($400 lender credit). They say that they typically improve scores 20 points a month.
Money Management
https://www.moneymanagement.org/
It is a non-profit with some good reviews, but I’ve never used it personally.
Frank Busch w Busch Credit Services LLC
He's done it for 24 yrs and have a A+ rating on BBB last I checked
Text or call cell 804 832 1089
30-45 days
$400 for a single, $600 for a couple
(application fee - $20 for each item removed bankruptcy, judgement, repossession)
($10 fee for all else (i.e. hospital, chargeoffs, late payments in bulk per account) except inquiries are $5)
Related:
About the Author: Adam Garrett - 3rd Generation REALTOR®
Adam is the 3rd generation in a line of award-winning real estate agents serving SE VA. He has served full time at Garrett Realty Partners since May 2014 when he joined the marketing department before transitioning to full-time sales to assist buyers and sellers in February 2015. He believes that an educated buyer or seller makes the best decisions, & is dedicated to helping with that both digitally & on-site physically for buyers & sellers. He's also available for referrals to real estate agents around the globe. In several capacities, his resources & direct offerings for assisting sellers & assisting buyers are either unmatched or are top 1% for the SE VA area, and in some cases, nationwide. Not stopping after closing, he also provides information for tenants, landlords, & homeowners.
Related for Buyers:
Related for Sellers:
While Adam can refer buyers and sellers elsewhere, Adam’s direct coverage includes most of SE VA including Hampton Roads (VA Peninsula, Southside, & Middle Peninsula), the Northern Neck, & Greater Richmond.
Adam's Coverage Map with Adam's 5 Multiple Listing Services highlighted in orange & areas without good MLS coverage excluded:
Related for Agents
Additional Related
Always there to help. Thank you for the details and amazing advice Adam!