Simple Tips to Optimize Your Credit Score For the USDA Loan

Credit Guidelines For USDA Loan

One of the best things about USDA Loans are their flexible credit guidelines. USDA home loans have some of the most credit flexible guidelines out of any mortgage program in the country, and will usually go as low as a 580 credit rating to get approved. Even people with little to no credit can be eligible for USDA loans by proving consistent employment and providing recent rent payment records. However, while the USDA loan program is very credit flexible, that doesn’t mean that they will accept low credit scores. If your credit score is below 580 you may want to take some time and see what you can do to optimize your credit score before applying. Here are a few tips to get you started.

Open New Accounts

Most of the time, credit reports that contain lower credit scores are often due to the individual lacking enough good current credit. This can mean that the individual simply does not have enough credit accounts out there to adequately raise their score. One way to do this to obtain and open new credit accounts. There are even creditors who cater to this low credit market and can get you a 2nd or 3rd credit line, in addition to what you already have. These can be through secured credit cards or merchant cards that work as a revolving line of credit through a particular retailer. In most cases these creditors will charge slightly higher interest rates or a fee because of the risk associated with extending credit to low credit customers. However, just making a few small payments a month on each card can go a long way to raising your credit score.

Settle Negative Accounts

One of the best things you can do to optimize your credit score for a USDA loan is to settle any negative accounts. These can include collections, debts, doctor bills, ect. While this may seem daunting, there are actually a number of ways to help simplify this process. One is by going to a professional credit card counseling service. Here they will work with your creditors to help you get one low payment a month that will, in time, pay off your debt. Credit card counseling companies can also negotiate with your creditors to get them to remove any negative items that might be on your credit report.

Debt Settlements

Your creditors may also give you the option of settling your entire debt with a debt settlement offer. Debt settlement offers are great opportunities to pay off your debt in full and often come with a 20-30% discount of the total amount owed. This will require a large initial payment up front, but will help to increase your credit score by a larger amount than paying it off in small increments. It is always recommended to consult with a credit professional before making any large debt and credit decisions.