Can I buy a house with a low credit score, but good credit history in the past?

[westbroc90]

My husband and I bought a house together 9 years ago. We never missed a payment and we sold it two years ago. Since then our great credit has dramatically gone down. I just checked my score and it's 620. It's only been within the past 2-3 that we have missed payments on anything. We would really like to buy another house and we are currently paying off debts and trying to build our credit back up. We have never had a bankruptcy, no student or car loans, just a couple credit cards and some small bills that went to collections due to moving and our mail not getting forwarded. So, we are living with in-laws right now and desperately want to buy a house. Is there a possibility of this in the near future, or should we just be focusing on finding a place to rent again?

[curadhan74]

My husband and I bought a house together 9 years ago. We never missed a payment and we sold it two years ago. Since then our great credit has dramatically gone down. I just checked my score and it's 620. It's only been within the past 2-3 that we have missed payments on anything. We would really like to buy another house and we are currently paying off debts and trying to build our credit back up. We have never had a bankruptcy, no student or car loans, just a couple credit cards and some small bills that went to collections due to moving and our mail not getting forwarded. So, we are living with in-laws right now and desperately want to buy a house. Is there a possibility of this in the near future, or should we just be focusing on finding a place to rent again?

Nowadays, you need to have nearly perfect credit, and even then the banks tend to be stupid and are very reluctant to give out loans.

You need to get your ratings into the 700s at a minimum.

You can use www.creditkarma.com to track your rating for free, as well as get information about how to improve your scores or find better deals on credit cards and stuff. However it sounds like you guys know what to do - just keep making payments, get rid of your debts.

Also, pull a full credit report and make sure there isn't any old entries that should be taken off. My wife had an account that was still claiming to be overdue 3 years after she had paid it off. We had to fax a copy of the "paid in full" notice several times to get rid of that stupid entry...

I think missed payment entries drop off around 3-4 years so you guys should be in good shape pretty shortly. In the meantime, save up for that down payment - most banks will require you to put at least some money down now.

[erwin]

Focus on renting an dbuilding yoru score back up.

[curney13]

No you cant, that's like saying I use to have a job.

[iker]

While many lenders now require 640 to 660 credit scores there are still some that will approve a 620 score. You will have an interest rate .375 to .50 higher than you would have with a 700 score, but rates are so low right now you could end up with an even higher rate if you wait for your score to improve. Just one year ago 5% was a great 30 year fixed rate.
It won't hurt to call those creditors to see if they could do something about the reporting of the late payments. If you paid the bills promptly after finding out about the mail forwarding problem and they value your business the worst thing they can say is "no". If you meet the income and down payment requirements you should be able to find a lender that can approve you.