Real Estate Stew – Can I purchase a home with a 590 credit score?

Patrick: Hello and welcome back guys to Real Estate Stew with the What’s Cooking Crew. I’m Patrick. Keisha: And I am Keisha. Patrick: Keisha. You know, it’s a little cool outside, but, wow, you’re certainly looking nice today there young lady. Keisha: Thank you. We are in Houston. In Houston, Texas, we get one maybe two days of cold weather. Patrick: That’s it. Keisha: When those days come around I have to whip out my best, because I get a chance to wear them once or twice. Patrick: My wife, I have to admit guys, whenever y’all see the videos and you’re like, “What in the world is Patrick wearing today? That means I dressed myself.” Other than … I love these days, because I get surprised. I’m like, “What does my wife have for me?” Keisha: What am I wearing today? Patrick: Keisha, questions. Keisha: Yes. Patrick: We’re always getting great questions from you guys, so let’s look and see what we have today. Keisha: Thank you so much for your great questions. Let’s see. Today, we are addressing … We have a viewer who wants to know is it possible for someone with a 590 credit score to buy a home. Patrick: Oh, 590. Ok Excellent question. Keisha: That question is very specific. So, a 590 credit score. I guess I’d want to say, I’m assuming that the question was sent our way because the belief is a 590 credit score is considered relatively low and because a 590 credit score is considered relatively low, this particular buyer feels like they don’t have the options that they need. Patrick: So, so, here’s what I would say, because I get that question a lot. So, guys, understand when it comes to credit scoring, lenders have what you call FHA, Conventional, VA, your loan programs. And there’s standard guidelines across the board for all lenders with these different programs, right? Keisha: Right. Patrick: But, lenders can layer those guidelines . For instance, FHA, typically the standard guideline is, hey, we want a minimum credit score of 580. Keisha: Yes. Patrick: Ok, but a lender could come along and say, “Hey, no problem, but if I’m going to loan you money, my money I want a 600.” Keisha: Absolutely. Patrick: But now they have to be fair. If you say 600 is what the score needs to be, then it’s gonna be 600 FHA for all applicants across the board. Keisha: Across the board, absolutely. Patrick: Back to the point here with the question, if we’re thinking just score like the bottom, “Mr. King, Keisha, will a 590 work?” Guys, there are lenders that I know Keisha have gone as low as 580 for most lenders . You can actually get approved, guys, for loans with 580. Now, there may be some compensating factors and other things that you’ll need to have in line with that loan in order for it to work out with the lower scores, but yes, you can. Also, if you’re a veteran, VA, I’ve had veterans get approved even below the 580. Keisha: Yes, the VA does have a minimum credit score requirement. Patrick: There you go. Did y’all hear that? Important to know. Veterans, excellent. You don’t need to worry about that 580. You can go even lower. We definitely recommend you reach out to some lenders that are very familiar with the VA programs like USAA. I guess I can do that, right? Keisha: It looks you did it. Patrick: Okay, I’d did do that. USAA. There’s plenty, Navy Federal, etc., etc. But, back to the score, 590. I would say think 580 low across the board unless you’re a veteran. Most lenders, I’ve seen 600 Keisha: I’ve seen 500. Okay. Patrick: 620/640, but guys on a serious note, if you came to me and said “Patrick, what do you recommend? Where do you think we really need to be?” I’m gonna tell you that a good target score would be about 620. Most people with a 620 I see with lenders all day long. Keisha: Maximize your options. Patrick: Maximize, with great great interest rates, etc. You want good terms . If you’re gonna purchase, I want to see with good terms. I would say target 620. If you get a 640, even better, but I have seen some 600s. Normally about 620 or 640. Yes, short answer to the question is a 590 would work. Keisha: That was the short answer. Patrick: Yes. Keisha: So Patrick Okay, Keisha, we’re gonna talk. No, I’m teasing. Keisha: So, the one thing that I will add to that short answer is when you as a buyer are evaluating your own credit score, because oftentimes we find that buyers will come to us. They will say, “I have a 590 credit score.” They’re basing that on something that they pulled themselves. Keep in mind that lenders look at not one credit score but three. Patrick: Three. Keisha: They will base their lending decisions on the median credit score. What is the median credit score? The median credit score is the one that falls in the middle when you line the scores up numerically. In numerical order, the one that’s in the middle at that point. They don’t average them. They don’t take the highest, they don’t take the lowest. They take the one- Patrick: Keisha, I’m listening to you, but you know people are visual. They’re like, “Numerical order? You line them up?” Example. Give an example. I want five, six, seven. Right, Keisha? Keisha: Yes. Patrick: Five, six, seven. Keisha: Six is in the middle. Patrick: Six is in the middle. 500 the low, is out. 700 the high, is out. The one that’s left, 600, that’s your median score. Keisha: Absolutely. Patrick: That’s it, right? Keisha: Absolutely. Patrick: Okay. Just want to make sure. Keisha: You just want to make sure that you’re evaluating the right credit. Also, keep in mind that the score that you see as a borrower if you’re pulling from some of the secondary sites may differ from what the lender sees. Just make sure that before you make a decision regarding whether or not you can buy it based on a credit score that you’ve seen on your own, get that validated with your mortgage company. Patrick: Very important. Keisha: Did we forget anything? Patrick: Keisha, I think you covered everything. Keisha: I did. Patrick: In your short response. No, I’m teasing. Keisha: I did. We always want to thank you all for sending in your questions. We want to remind you to send additional questions to [email protected] Patrick: Don’t forget, guys, we want you to like us. Keisha: Subscribe. Patrick: And comment. Keisha & Patrick: Yay! Keisha: Also, real quick. Shout out to Perry Holmes. We are in one of their lovely models here- Patrick: Most definitely. Keisha: … in the South Lake community. We always want to thank our sponsors, our model home sponsors that allow us to come in and invade their spaces for a day. Thank you, guys. Y’all have a great week. Patrick: See you next time, guys.

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