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Answer to Question - 530 credit score
Question: I have a 530 credit score and was told that I can get an FHA loan with a substantial down payment but the lender is giving me a hard time in getting the loan. What’s going on?
First, let’s understand what a 530 credit report looks like? Several factors can bring a score down that low (300 is the lowest). Perhaps the person has 1 credit card and 5 collection accounts that are currently reporting as delinquent. Almost always, collection account balances match the credit limit which further lowers the score. The person may have several collection accounts and no open credit lines. Low credit scores are a result of not enough open lines of credit, not necessarily that there are a lot of bad lines of credit.
Every bank has its own different guidelines. For the most part, it comes down to common sense. Put yourself in the bank’s position when determining lending money to someone. Example: the person has a recent bankruptcy followed by a foreclosure and all the credit cards are in default. Would you lend to someone with a credit profile like that? What if the person told you that the reason for the delinquency was due to ... more
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