Credit And Construction Loans

Most traditional construction loans require a 680 credit score or better for qualification.  Some niche lenders offer loans on scores less than 680. These loans typically charge higher interest rates and require substantial equity, or money down.  Making a tough situation even worse, loans with less than 680 credit scores loans require 15% of total costs into the transaction in form of cash to close or equity. 

Even if a person has a 680 or better credit score they still can be denied a loan if their mortgage is reporting a 30 day late in the last year on either a first or second mortgage, HELOCs included.  Missed mortgage payments can be true deal killers.

If you haven’t reviewed your credit in over a year it’s highly advisable to purchase an online copy.  Review for inaccuracies, inquires, open trade lines, and public record information. For more information about credit, download this booklet “understanding your credit score” from myfico.com.  Wikipedia has detailed information about credit scores.

Credit ratings not only play a role in qualifying for a loan but will also effect insurance premiums and being extended credit by suppliers.

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