Most people have some credit challenges, and that can be managed (so don’t feel like you are the only person in the world without perfect scores). But, it is good for you to know that we have tools – that in certain circumstances will help us boost the credit score of a client who needs a higher score to get approved (or for a better rate). For us, it is a matter of working with the client to know what the hurdles exist, and then selecting a lender, or loan program that fits the needs of the borrower.
Great Credit comes from having good history of credit. A credit score builds as an individual takes on credit, (in the form of Student Debt, Credit Cards, Auto and ultimately Home loans) and then that person demonstrates a history of responsibly paying them off those liabilities in a timely and agreed upon manner.
A person who has never had debt may be very conservative/responsible with money, but the lenders don’t have a way of knowing how they will deal with credit – because credit scores get built as creditors report on each person’s payment history. No credit can mean no credit score at all. Consistent, timely payment on a student loan or credit card will build your credit up, but it can take some time for that to occur.
Often times, younger home buyers, haven’t had a lot of time or ability to establish credit, or made one or two mistakes early on, and so have lower scores. The good news is that there are good programs that take into account their situation, and help younger borrowers get into homes.
Of course if you have several accounts that reported 30, 60, 120 days late, it can take several years until those dings disappear, and so rebuilding may take more time. And problem on a previous home, such as a foreclosure can be huge impediments to qualifying for many programs for up to seven 7 years. But, even in those cases, it is a matter of matching the borrower with a lender that looks more at other criteria for making the loan decision.