"Can I buy a house if my credit is bad?" The realtors' answer on the episode is yes — with a caveat that decides everything: bad credit doesn't block the purchase, but it does determine how much it's going to cost.

"There are loans out there for everyone. If you don't have credit, you're going to need a bigger down payment, and the rate the bank gives you is going to be higher too." — one of the show's realtors, on the episode

The score scale

In the United States, credit history turns into a number, the credit score. The model most used in mortgage lending is FICO, which runs from 300 to 850. On the episode, the realtors recall extreme cases — one score sky-high, another down at 250 — and joke about the numbers; on the FICO scale, the floor is actually 300. There are other models, like VantageScore, but mortgage lenders mainly work with FICO versions from the three bureaus: Equifax, Experian, and TransUnion.

As a market benchmark, above 740 usually secures the best terms; 670 to 739 is considered good; below 620, options narrow; and below 580, they're limited.

What it changes in practice

• Conventional: generally requires a minimum score around 620, and pricing (rate and mortgage insurance) worsens with each lower band.
• FHA: accepts a score as low as 580 with 3.5% down, and 500 to 579 with 10% down — though many lenders set their own higher minimums.
• Non-QM loans: exist for situations outside the standard box, with a bigger down payment and higher rates.

The extreme case told on the episode shows the limit: for a person with destroyed credit, banks were asking for 75% down and 10% interest. "You might as well pay cash," one of the realtors jokes. At that point, the priority stops being buying and becomes rebuilding credit.

Bad credit isn't the same as no money

The realtors are careful to separate the two. A lot of people have bad credit because of things life throws at them: an acquaintance had her credit wrecked by hospital bills from a car accident; other people cosign for someone starting a business and inherit the debt. None of that means a lack of income or savings.

On medical debt, there's one useful change: since 2023, the three major bureaus have removed paid medical collections and any under $500 from reports. A broader federal rule that would have stripped all medical debt from credit reports was approved in January 2025, but was struck down by a court in July of that year.

How to improve your score

• Pay everything on time going forward: payment history carries the most weight.
• Cut down your card balances: keeping balances well below the limit (ideally under 30%, better under 10%) helps fast.
• Check your reports at all three bureaus and dispute errors — it's a right guaranteed by law, and reports are free at AnnualCreditReport.com.
• Don't open several new accounts at once.
• Negotiate old collections with guidance, knowing that paying doesn't always remove the record right away.
• Be careful cosigning or lending your name: the debt becomes yours too.

Who can help — and the caution around promises

The first step, the realtors recommend, is talking to a lender. A lender reviews the report and points to what to do in the short and medium term — and has an interest in doing so, since they want the loan approved. Talking to a lender and a realtor costs nothing.

There are also private credit repair companies. The realtors note that they do charge — which seems contradictory for someone already stretched thin — but that payment plans exist. What buyers need to know: under the Credit Repair Organizations Act, a federal law, these companies can't charge before performing the service, must give a written contract with a three-business-day right to cancel, and can't promise to remove accurate information from a report. Everything they do — like disputing errors — a consumer can also do alone, for free.

Don't give up

The realtors close out the answer with the same message: bad credit today doesn't mean bad credit next year. With a plan, it's possible to reach the purchase on far better terms than today's.

This text is for informational purposes only and doesn't constitute financial advice. Approval criteria vary by lender and program.

Sources and verification

• FICO — the 300-to-850 scale and score factors.
• HUD Handbook 4000.1 — minimum score of 580 for 3.5% down, and 500 to 579 with 10% down, on FHA loans.
• Consumer Data Industry Association — removal of paid medical collections and those under $500 by the three bureaus (2023); ruling by the U.S. District Court for the Eastern District of Texas striking down the CFPB's medical debt rule (July 11, 2025).
• Credit Repair Organizations Act (15 U.S. Code, section 1679 and following) — ban on advance fees and the right to cancel.
• Federal Trade Commission / AnnualCreditReport.com — free access to credit reports.
• Transcript and chapters from episode 11 of the Cadê Moradia podcast (recorded April 2026), with the show's realtors.

Watch this part of the episode:

Can You Buy a House with Bad Credit? — starting at 13:19 · South Bay LA, CA