Low Credit - High Hopes!
Updated: Sep 25
Just as a less-than-stellar SAT score doesn’t preclude you from ever achieving a college education, a lower credit score doesn’t have to mean you can’t qualify to refinance your current mortgage. In fact, using the equity in your home can actually improve your credit standing by consolidating debt, reducing your monthly payment, or paying down other high interest obligations.
EnTrust Funding are proud to be low credit score mortgage lenders. We want to see you get the best mortgage possible despite your low credit score. For those suffering from poor credit, EnTrust offers nontraditional loans that may fit your needs best.
Here is a look at a few of our best nontraditional loan programs:
Bank Statement Program – You can qualify for this loan by using a bank statement that documents your income. Maybe you are a self-employed borrower with a low credit score and are unable to obtain a traditional mortgage. EnTrust’s bank statement program is the perfect loan for you if that is your current situation.
Pledge Assets Loan Program – This program offers you financing up to 90% of a home’s value by pledging security assets or savings instead of a down-payment, second mortgage, or home equity loan. This type of loan is best suited for those struggling with low credit scores who wish to defer capital gains or losses and still maintain their investment strategy.
Asset Depletion Program – If you are unable to get traditional financing, you can utilize your liquid assets to qualify for a loan. We recognize that borrowers struggle with their credit score status. That is why we use asset depletion to help meet ratio guidelines for borrowers who have significant assets.
As low credit score mortgage lenders, EnTrust Funding has loan officers that are knowledgeable in the nontraditional programs with the ability to help you select the best program for your current situation. To learn more about the other nontraditional programs we have, contact EnTrust Funding. Despite your low credit, we can help you pick the best nontraditional program.
There are ways to make your money work for you when FICO is not your friend. FICO stands for Fair Isaac Corporation and while there are other bureaus who help lenders decide if your credit is worthy, FICO is the common term used to cover the different sources used.
Credit scores typically fall between 300 and 850, with numbers above 800 considered excellent and those below 579, poor. Statistically, about 34% of Americans are below 670 which is considered an average score. The good news is, low scores can be mended and often quickly, so there are steps to take right away to improve your score for refinancing:
Pay on time. Payment history makes up 35% of your FICO score so avoiding late payments can change the numbers quickly.
Check for errors. Doing everything right but still showing a low score? Studies have shown up to 25% of consumers had some error on their report negatively impacting scores. Review your credit report periodically to resolve any problems.
Keep credit utilization low. Experts recommend that the amount of money you owe on credit should be less than 30% of what you have available. In other words, if your credit limit is $10,000 you should keep your balance owed below $3,000. A balance lower than 10% can further increase your score.
No new credit. Avoid applying for any new credit in the period before pursuing a home loan. The exception is if you have no credit at all and you need to establish some. Also, don’t close out any cards completely as that can lower your score.
Once you’ve taken steps to improve your credit score you can bring your debt consolidation full circle by taking advantage of the equity in your home. With record low interest rates, refinancing can lighten the burden of your current mortgage by substantially reducing your monthly payment with a lower fixed rate. Refinancing to take cash out of your equity is also a great way to pay down high interest credit card debt, thus further improving your FICO score.
So, if you looked at your credit score and resigned yourself to being buried by debt, we hope this has restored some hope. A low FICO is not a dead end and we at EnTrust Funding (ETF) can point you in the right direction.
We offer an array of specialty products that are tailored to those with low credit scores, as well as second chance programs designed for borrowers who have had a prior credit event such as bankruptcy.
Your home is an asset – let #entrustfunding help you make sure it’s working for you, not against you.