What credit score is needed to buy a home?
A credit score is not the only factor that affects your mortgage application, but it is a significant one. So, when you start house-looking, you should understand where your credit stands and how to leverage it to get the greatest mortgage rate possible.
Let’s start with the credit ratings.
Your credit score (also known as a FICO Score) can range between 300 and 850. A score of 740 or greater is generally considered outstanding, although it is not required to acquire a home. Credit scores are maintained by national credit bureaus and include debts such as credit cards, auto loans, and student loans.
Many things affect your credit score, but the two most essential are whether you pay your payments on time and how much debt you have. A credit score based on these characteristics allows lenders to quickly assess whether you are likely to pay your future expenses, such as your mortgage.
Mortgages and Credit Scores
Though your credit score is an essential factor in the mortgage process, it does not always mean that you will be denied a mortgage if you do not have a high score. Lenders will also consider your income, employment history, debt, the size of the mortgage you’re looking for, and your down payment.
You may be able to obtain better loan terms if lenders review all of the documentation and determine that you are likely to make your mortgage payments in full and on time.
The average credit score necessary for most mortgages is about 620. Government-backed mortgages, such as FHA loans, often have lower credit requirements than traditional fixed-rate and adjustable-rate mortgages (ARMs).
We can help you choose which mortgage alternatives are suitable for your condition and lifestyle.
Increasing your credit score
If you have bad credit and are a first-time home buyer, you should start working on it before shopping for a property.
Check your credit score to determine where you stand, double-check your credit history, and always make your payments on time. If you are an existing US Bank client, you can.
Multiple credit applications submitted in a short period of time may dissuade lenders from issuing you a loan. To keep your choices open, here’s a quick list of things to avoid while applying for a mortgage.
