CREDIT SCORES & BUYING A HOME
Before you jump headfirst into searching for your dream home, you need to ensure your finances are in order. This includes reviewing and strengthening your credit. Here’s what you need to know!
Why Your Credit Score and Report Matters
As a buyer, a strong credit score and report make you a more desirable loan candidate. When deciding to approve you for a home loan, mortgage lenders take a deep dive into past car loans, student loans, credit cards, bills, and more. They also review your history of repayment and public-record information. If their findings are positive, they will be much more likely to approve you for a loan (and offer lower interest rates and better terms).
What Credit Score Do You Need?
The credit score required for a loan depends on the type of mortgage you select, the size of your down payment, and your lender. According to Quicken Loans, most lenders require around a score of 620 or higher to be approved for a conventional mortgage with lower interest rates and flexible repayment periods. If a buyer would like a Federal Housing Administration (FHA) loan, they require a minimum score of 580 and, for a loan through the U.S. Department of Veterans Affairs (VA), score requirements differ depending on the private lender.
How to Improve Your Credit
Reviewed your credit score and realized it may need some work? There are ways to improve your score. These include, but are not limited to, correcting payment errors on your credit report, ensuring you make all payments on time, making micropayments between due dates, and paying down credit cards.