If you're planning to buy a house, managing your credit score is vital. Mortgage lenders use credit scores as a benchmark for qualification, and a lower score can hurt your chances of being approved for a mortgage.
Here are some more details about how credit scores affect your mortgage loan chances:
What should my score be before I apply for a regular mortgage?
The customary loan application process requires a credit score of at least 620. It's possible to get a mortgage with a lower score, but you may have a higher interest rate as a result.
How is your credit score determined for a mortgage?
The loan officer obtains a single credit report containing all three credit report types. The lenders may use your credit score or lower middle credit score to decide if a joint partner applies.
How can a good credit score help with mortgage approval?
Mortgage lenders require higher credit scores because they use it as a way to measure how well you handle outstanding debt. The higher your credit score is, the less risk you pose to their lending. You could end up saving thousands over the life of your loan and capitalize on a lower monthly payment.
Is it possible to get a home with bad credit?
It's possible to get a mortgage with a low credit score, but there are trade-offs to be aware of. With conventional loans, a lower credit score might require a higher down payment or private mortgage insurance.
Other loan options like VA loans or loans offered by the Federal Housing Administration have more flexibility when it comes to minimum credit score. However, these mortgage loans come with other specific requirements for approval.
Maintaining a good payment history and credit report will help you in more ways than just getting a mortgage. However, for a major purchase like a home, it's crucial to have the best possible financial standing before beginning the process.
About the Author
Joseph Nuzzolo
Joe was Born and raised in New York and came to LA when he was 25 years old. He started in the fine arts industry with tremendous success. As a Sales Expert, he has closed over 11,000 art deals. It was his love of working with fine art, his creative mindset – and a succession of personal real estate investment deals – that led him into the world of real estate. He was the top agent for 3 Leaf Realty before opening his own firm.
In 2017 Joe decided to branch out on his own and launch his long planned and awaited, Thompson Team Real Estate based in Torrance. Where he and his team of hand picked agents cater to a discerning clientele. Through his 30 years of sales experience, Joe has built a strong and formidable reputation with clients, industry professionals and peers. He utilizes the latest technologies, market research and business strategies to exceed his client’s expectations. More importantly, he listens and finds solutions that are tailored to each client’s specific needs.