Dear George: I'm single and have worked at the same job for the past six years. I don't earn much, and my credit score is in the low 500s. What are the chance that I can get approval for a mortgage as a first-time buyer? Should I get a co-signer?
Answer: Working for the same employer for six years shows consistency, which is in your favor. However, most lenders will balk at a credit score in the low 500s. Here's a rough outline of what FICO credit scores mean to lenders:
- 700+: Excellent.
- 680-699: Good.
- 620-679: OK. You likely won't be denied a loan, but the terms may not be generous.
- 580-619: Banks and lenders are probably able to get you a loan, but it will be very expensive for you.
- 500-580: You're in trouble. You'll need some credit repair before you get a loan.
- Below 500: You need to repair your credit now.
You should enroll in a credit-repair class with an organization that belongs to the Better Business Bureau. Try this before you enlist help from the co-signer. Raise your credit score before taking on more debt.