The 3 credit reporting agencies are Equifax, Experian and TransUnion. For a real estate mortgage, there would be a tri-merge or credit score average from all 3 for your score. There are factors that affect your score such as serious delinquency, too many accounts with balances, too many inquiries in the last 12 months, number of delinquent accounts and high balances on revolving accounts. A good payment history will offset these credit factors. You should dispute incorrect information in writing and have duplicate information eliminated by reviewing your credit report yearly at www.annualcreditreport.com which is free. Secured credit cards or credit cards even at $500, if paid on time for a period of time will increase your credit score. Get a free credit score at www.creditkarma.com (one score from one credit reporting agency) which will tell you where you stand.
It is required to verify 2 years of commission or part time income and 1 year for hourly or salaried full time jobs. 2 years of tax returns are needed to verify taxes paid and self employed individuals will also need 2 years of tax returns with a focus on the “net” income. A bank statement will be used to show direct deposit or frequent deposits for your down payment, if required. You don’t need a lot of credit to qualify for a home, just enough to give you a credit score at or above 640 (depending on the type of loan and type of credit). 12 month rent history, social security card with non-traditional credit usage such as cell phone, insurance, utilities and layaway, if needed. Chapter 7 must be discharged for 2 years with re-established credit. Foreclosures have to be over 3 years. Chapter 13 bankruptcy must be discharged or 12 months of satisfactory pay history with trustee letter. Medical bills can be ignored in some circumstances and collections will be at the underwriter’s discretion if credit score is at 640 or higher. All public records, judgements, garnishments, liens and defaulted student loans must be paid or paid current (12 month payment history may be accepted).
FHA, Conventional and VA are the types of loans available which each have ratios based on your income and debt that qualifies you for a loan amount. Gifts for down payment are acceptable, but have to show source and be from a bank account.