Posted on Nov 13, 2014

Credit expert Phillip Tirone of, informs us that mortgage giants Fannie Mae and Freddie Mac now accept credit scores as low as 620 for mortgage loans. So if bad credit has kept you from getting a home loan, you may be able to own a home sooner than you think!

Also, FICO is also revising their credit “algorithms” or formulas this fall, so that past due medical bills and paid collection accounts won't have such a negative effect on your credit score any longer.

Experts are warning consumers, however, that it may take a year or more for the recent changes to the credit scoring models to be used by most lenders, as some lenders do not quickly overhaul their systems to incorporate the new changes. So you might not see changes right away.

Mr. Tirone says that Fannie and Freddie are easing their previously tight lending standards to give worthy high-risk borrowers an opportunity to become homeowners. For example, they are reducing the required down payments from 5% to 3%. However, if you put less than 20% down on a home purchase, you will still need to purchase private mortgage insurance or PMI.

And just because a 620 score may barely qualify you for a Fannie or Freddie mortgage, doesn’t mean you should not work on improving your score. We offer our clients Mr. Tirone’s “7 Steps to a 720 Credit Score” credit rebuilding course, which can show you how to obtain a 720 or higher credit score within 12-24 months of completing a bankruptcy, provided that you follow the steps.

The very best interest rates and terms are available to borrowers with a 720 or higher score, according to Mr. Tirone, who is also a former mortgage broker.

It’s not unusual for our clients to rebuild their scores quickly after a bankruptcy discharge. One client contacted me recently and said she had a 686 credit score only 10 months after she was discharged in chapter 7. She was unhappy that it wasn’t higher! I told her that it was a very good score so soon after a bankruptcy, and basically that good things take time!

And please don’t pay lots of money to a “credit doctor” or someone to “repair your credit.” Many of them use fraudulent methods that will backfire on you, not to mention the high expense. We recom-mend that you take Mr. Tirone’s “7 Steps” course so that you can learn how to rebuild your credit legally and inexpensively.

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J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization