What your credit score means to you when buying a home.

DETROIT ? Feb. 5, 2010 ? Lucas Harrison-Zdenek has tried twice since last summer to get a federal loan to buy a foreclosed home.

His credit score hasn?t been good enough. It was 575 last fall when it needed to be 580, and is now 606 when it needs to be 620. He was denied again earlier this month.

The Ferndale, Mich., massage therapist is hopeful that an update to his credit report to reflect some recently paid debts will push his score up to 620. He?s aiming for a mortgage on a four-bedroom, 1 1/2-bath house in Ferndale that?s priced at $70,000.

A Jan. 1 change in federal lending guidelines has made it harder for people to benefit from Neighborhood Stabilization Programs, which help lower-income buyers purchase foreclosed homes. The rules pushed the minimum credit score to 620 for an FHA loan.

?Every time we get denied, I feel like we are closer to getting approved,? said Harrison-Zdenek, 25.

He?s now renting a house in Berkley for his wife, Genevieve, and 3-month-old son, Lincoln.

Harrison-Zdenek?s experience is pretty common for people who are at or below 50 percent of the local median income, or $31,450, for a family of three.

The programs include mandatory homeowner counseling classes and applicants must be able to qualify for a mortgage. And 25 percent of the federal grant money must go toward helping those at 50 percent of the median local income buy homes.

Officials administering the program say it has been a big challenge to find families who qualify in the low-income category and have the necessary 620 or higher credit score and 24 months of income history. Additionally, the Oakland County, Mich., program doesn?t allow people with a foreclosure or bankruptcy in the past three years to participate.

?It is brutal. It means that they don?t get the house,? said Gordon Lambert, chief of operations for Oakland County?s community and home improvement division. ?This credit crunch is really, really impacting the whole community.?

Marsha Scheer, who coordinates the Neighborhood Stabilization Program for Ferndale, said the city has closed on homes sold to five low-income buyers so far. The city hopes to help 25 to 30 families buy homes in the community.

Ferndale contracted with Home Renewal Systems to implement its program. Home Renewal handles everything from getting potential buyers qualified, finding homes, rehabilitation work and closing on the mortgage.

Cathy Doig, marketing director for the company, said federal lending guidelines have made it harder to get people in homes.

She said that people with lower incomes sometimes have low credit scores because of damaged credit. More often, though, applicants are ineligible because they haven?t established credit. These are people who do not use credit cards or make installment payments on vehicles, but they pay their bills on time.

?In order to have a high credit score in this country, you have to use credit,? Doig said.

She said the company?s staff works with these potential homeowners on getting their credit scores up, but that can take months.

Harrison-Zdenek is hopeful that he will qualify for a mortgage before the minimum credit score is raised again.

?If (the loan officer) didn?t feel Genna and I were worthy of homeownership, they wouldn?t try so hard,? Harrison-Zdenek said.

Copyright ? 2010 Detroit Free Press. Distributed by McClatchy-Tribune News Service, Greta Guest.