The importance of your credit score when buying a home
There’s no denying your credit score plays an important role in your ability to be approved for a mortgage and to receive the lowest interest rate possible on that loan.For these reasons, let’s look at the factors that make up your credit score and how you can improve it.
To begin with, you need to know your current credit score. Each of us is eligible to receive a detailed copy of our credit report for free each year. Pull your credit report and carefully review it for potential errors or areas of concern.
Some of the most important aspects for lenders, the article states, are:
* your employment history (is it consistent, do you change jobs often, are there employment gaps?)
* how you’ve handled debt in the past (do you make late payments, max out credit limits, etc.?)
* foreclosures, liens and bankruptcies (have you experienced any of these?)
Today, most lenders are looking for a credit score of at least 660 “to consider lending the funds needed to buy a home. For reference,” the article states, “850 is the maximum credit score, while anything under 650 is considered low.” Interestingly, the average US score is 695, and only about half of people have a credit score between 700 and 850.
“In order to qualify for a better (lower) mortgage rate,” the article concludes, “you’ll need a score of 740 or higher. If yours isn’t close to this range,” you may want to begin working with a credit repair agency to rebuild your credit and develop a plan to repay debt you may still carry.
Luckily, if you choose to get your mortgage through Tucker Mortgage, you can also work with our credit repair service, called Precision Credit. If you do so, up to $500 of the cost of this service will be returned to you at closing.