Credit Score Needed For USDA

I am currently living in a house that foreclosed this month. It is a nice four bedroom home I’ve been renting a little over a year now. I really like the house and would consider buying it but there are credit issues I’m working on to improve my credit score. Are their any non-conventional loans that would give me a loan. Recently, I went on the USDA web site and they offer loans to someone like me who wouldn’t qualify for a conventional loan, but nothing is said regarding credit. What do you suggest I do.
In deep thought about this.

Tarris

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Hello Tarris,

Without knowing more I’d suggest that a 620 score is the minimum benchmark to be at or above before applying for a mortgage loan.  It’s possible to obtain USDA or FHA financing with a credit score below 620.  According to a May 7, 2009 USDA Administrative Notice #4441:

“Based upon the portfolio review of SFHGLP loans, applicants with credit scores of 619, or below, have a statistically higher likelihood of default.  This does not mean all applicants with credit scores of 619, and below, are poor credit risks and should be automatically rejected.”

The USDA notice goes on to identify how to deal with scores below 620 by evaluating: (1) adverse credit history, (2) debt-to-income ratios, (3) payment shock, (5) rent verification, and (5) income or job stability.

Thanks for the questions and hope this helps.

Paul