In order to get an FHA loan with a down payment benefit, your credit score needs to be higher than 580. If your credit score is not exactly where you need it to be to get that loan, you might seek out new ways to secure funding. The easiest way to get that funding is to improve your credit score. The problem? There are several different kinds of myths about credit scores that continue to be used as facts. Ignore these myths in order to get that FHA loan and the low down payment you deserve.
Closing All Your Accounts Will Boost Your Score
One of the most common myths going around is that you need to close all your accounts to get a good credit score. The truth is that you need to have open accounts to establish a solid credit score. If you do want to close accounts, make sure that you close your newest account first.
Your Score Goes Down When You Check It
Checking your credit report or your score will not bring it down. You can check your score as often as you want with no consequence. In fact, you should be checking your score often to ensure that you are the most up-to-date about your credit score.
Paying All Your Debts Will Instantly Boost Your Score
Different organizations report to credit bureaus at different times. Building good credit requires you to commit for the long haul, as it can take weeks or months for your credit score to reflect the most recent payments.
Paying Collections Will Instantly Boost Your Score
Anything that goes into collections will stay on your credit report for many years. While you might see a slight increase in your score right away, it is still something that will appear on your report for several years to come. This could negatively influence your FHA loan if the collections issue is recent.
Your Score Is the Same Across the Bureaus
There are three major credit bureaus, and each one uses a slightly different formula to come up with your score. It is important that you know which one your FHA loan provider will be using and what kind of formula this bureau uses.
The Truth: You Need Professional Help
It is a good idea to speak with an FHA loan professional, such as Right Trac Financial, to learn more about your credit score and how you can improve it to get the loan you deserve. Reach out today to consult with a professional who understands your credit needs.