What To Know About Credit Scores Before Buying a Home

What To Know About Credit Scores Before Buying a Home

If you want to buy a home, you should know your credit score is a critical piece of the puzzle when it comes to qualifying for a mortgage. Lenders review your credit to see if you typically make payments on time, pay back debts, and more. Your credit score can also help determine your mortgage rate. An article from US Bank explains:

“A credit score isn’t the only deciding factor on your mortgage application, but it’s a significant one. So, when you’re house shopping, it’s important to know where your credit stands and how to use it to get the best mortgage rate possible.”

That means your credit score may feel even more important to your homebuying plans right now since mortgage rates are a key factor in affordability. According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770. But that doesn’t mean your credit score has to be perfect. The same article from US Bank explains:

“Your credit score (commonly called a FICO Score) can range from 300 at the low end to 850 at the high end. A score of 740 or above is generally considered very good, but you don’t need that score or above to buy a home.”

Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan and the mortgage rate you’re able to get. As FICO says:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.”

If you’re looking for ways to improve your score, Experian highlights some things you may want to focus on:

  • Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
  • Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.
  • Credit Applications: If you’re looking to buy something, don’t apply for additional credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.

Bottom Line

Finding ways to make your credit score better could help you get a lower mortgage rate. If you want to learn more, talk to a trusted lender.

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Timo Rivetti has been serving his clients with a highly individualized service tailored to specific needs and requirements since 1998. Unparalleled knowledge and expertise in the region is invaluable when it comes to buying and selling real estate. Hiring an agent who knows the area inside out makes all the difference in a competitive market. Timo and his team of experienced professionals work with each and every client to find and secure the perfect property at the best price, with all of the required amenities in the right neighborhood. When it’s time to make a move, call Timo.

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maclir2001

Sold a Single Family home in Petaluma, CA.

Timo and his team guided me through the preparation for showing, including all inspections and document gathering, the actual showing, and help with negotiations so it was an easy and successful sale. It was a textbook-positive process.

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Timo helped me buy my first house! (Still can't believe it!) I had a lot of questions, but he and his associate Renee were patient, professional, and fast in answering all of them. I found Timo through a friend and he could not have been more helpful and knowledgeable about the whole process for this noob home buyer. Highly recommend he and Renee and am so grateful to my friend for recommending him.

Kevin76298

Bought and sold a Multiple Occupancy home in Petaluma, CA.

I cannot say enough about my incredible experience with Timo and his assistant Renee. I am 22 years old and had a dream of buying a house in westside Petaluma. Most people would say that is impossible, well not if you have Timo on your side! Timo walked me through the process and made me feel so comfortable and confident throughout the whole process. Timo truly had my back and did the impossible and I now am a proud owner of a house in west side Petaluma. I will be using Timo for any purchase or sell I ever have, and I recommend you do the same. Thank you again Timo! Together we “Made History”

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