What credit score is required to purchase a home?
A credit score isn’t the only thing that influences your mortgage application, but it’s a big one. So, when you go house hunting, you should know where your credit stands and how to exploit it to acquire the best mortgage rate available.
Let’s start with credit ratings.
Your credit score (often referred to as a FICO Score) can vary between 300 and 850. A score of 740 or more is typically regarded excellent, but you do not need that number or higher to purchase a property. Credit scores are kept by national credit bureaus and include debts such as credit cards, vehicle loans, and school loans.
Many factors influence your credit score, but the two most important are whether you pay your bills on time and how much debt you owe. A credit score based on these factors provides lenders with a quick way to determine whether you’re likely to pay your future bills, such as your mortgage.
Mortgages and credit scores
Though your credit score is an important consideration in the mortgage process, it does not always indicate that you will be unable to obtain a mortgage if you do not have a high score. Lenders will also take into account your income, job history, and debt, as well as the size of the mortgage you’re seeking and your down payment. You may be able to acquire better loan conditions if lenders evaluate all of the material and assess that you are likely to make your mortgage payments in full and on time.
The average credit score required for most mortgages is about 620. However, government-backed mortgages, such as FHA loans, often have lower credit criteria than regular fixed-rate and adjustable-rate mortgages (ARMs).
Our can assist you in determining which mortgage options are best suited to your situation and lifestyle.
Increasing your credit score
If you have terrible credit but are a first-time home buyer, start improving your credit before you start looking for a property. Check your credit score to see where you stand, verify your credit history to ensure it’s correct, and remember to pay your payments on time every time. If you’re a current customer of US Bank, you can.
Multiple credit applications reported in a short period of time can discourage lenders from granting you a loan. So, to keep your options open, here’s a short list of things to try to avoid when applying for a mortgage.
