When you apply for Manufactured Home Financing, your credit score is one of the primary factors that lenders use to decide if they are going to approve your mobile home loan or decline you. Other factors affecting the approval process are your income, savings (including personal savings and retirement accounts such as IRA's) and if you have any other assets such as stocks, bonds, or other assets.
Your credit score affects your potential approval for a mobile home mortgage but it is also the determining factor in formulating the interest rate you will be able to get from the manufactured home lender. The lenders have what is referred to as a rate sheet which has a range of credit scores and the corresponding interest rates for the financing alongside it.
The higher your credit score is, the lower the interest rate you will get from the lender for your mobile home or manufactured home loan. A higher credit score (above 700) indicates to the lender that 1) you are less likely to default on your home loan, 2) you will be making your mobile home or manufactured home mortgage payments on time and 3) they will see a return on their investment in the long run.
If you have a credit score on the lower side of the spectrum (under 700), it shows the lender that you are a higher risk to finance for a mobile home purchase, and the lender may wind up having to foreclose on the manufactured home, which is an instant red flag for the lender. In turn, the lender will increase your interest rate to offset this risk and see a higher immediate return on your mobile home loan in the form of the interest paid.
In this currently harsh economic climate, there has been somewhat of a dramatic raise in the standard for credit scores, which has made it more difficult to get a manufactured or mobile home loan. What was once being considered as an above average score, a 660 is now the MINIMUM for many lenders to underwrite a manufactured home and mobile home loan. This is why it is the best idea to raise your credit score to the highest possible rating before you decide to make an application for a mobile home or manufactured home loan. If you wait for a higher score to build, you will get a much lower interest rate (which translates into a lower monthly payment, as well).
There are several available tactics to achieve a higher credit score, which will increase you chances for funding approval of a manufactured home or mobile home loan. Contrary to popular belief, debt consolidation firms and credit counseling services can often harm your credit score in the short term, and wreck your potential to get new credit. Simply making your payment deadlines, paying more than the minimum payment, and slowly paying off your existing debts can work quickly to raise your credit score and improve your chances of securing a manufactured home loan or mobile home loan in the future. Having your credit pulled frequently lowers your credit score, because it gives the appearance that you are desperate for more credit, which is very bad. This makes it a very bad idea to apply for a credit card or car loan right before you apply for a manufactured home loan.
Very few people actually know the formula that results in a persons credit score, but the facts about how to increase it are very accepted, and if you want to be approved for a manufactured or mobile home loan then you must follow these rules. First, it is very important to not make any late payments, EVER. If you accidentally make a late payment, then just call the credit company, and ask them not to report it and they will usually just make an internal note and not give you a ding. Just dont let it happen again. Another important rule to live by is that you cant have too much debt as a ratio to your total amount of credit. This is basically a ration that shows whether you have maxed out your credit cards, or use them responsibly. When you apply for a mobile home or manufactured home loan, your financing company will pull your credit.
