There are a lot of reasons why we all want to own a home. It means putting down roots and having a space that is truly yours. Buying a home also means taking out a mortgage and your credit score is a major factor that lenders will consider to have a huge impact on your ability to buy a house.
Most real estate agents won’t take you inside a home without getting pre-approved. They require this so that they can show you properties that you can afford, and to see how serious you are about purchasing a home. But before lenders can decide to pre-approve you for a mortgage, they will look at your credit history and credit score along with several key factors like your employment history, income, and current debts.
Why is your credit score so important?
A good credit score can mean the difference between qualifying for a mortgage loan and having your application rejected. Mortgage lenders take a strong look at your credit score when determining whether to approve you and what rate to give you. The minimum credit score required for a mortgage depends on the type of mortgage loan you’re looking at. There are tons of types of mortgages: from fixed rate to adjustable rate, and government sponsored and private programs.
So, what’s a good score?
In general, a borrower with a score below 740 is likely to incur additional underwriting scrutiny, higher interest rates, and stricter requirements on their conventional mortgage. Everyone’s situation is different, but a score of 740 or better will put you in a better position to secure the best possible mortgage rates.
If your credit score isn’t where you want it to be, don’t get frustrated. Take the steps to evaluate your score and understand any ways to improve your credit health before you take the leap into home ownership. You can improve your credit score over time by following good credit practices. You may also talk to your agent’s recommended mortgage lender.
3 Major Credit Bureaus
In the United States, there are three major credit bureaus: Equifax, Experian, and TransUnion. When creditors and lenders check your credit, they’ll very likely to check your credit with one or all three of these credit bureaus.
- Equifax: P.O. Box 740241, Atlanta, GA 30374-0241, 1-800-685-1111
- Experian: P.O. Box 2104, Allen, TX 75013-0949, 1-888-EXPERIAN (397-3742)
- TransUnion – P.O. Box 1000, Chester, PA 19022, 1-800-916-8800
Check Your FICO scores for FREE
Making sure you find the right lender for your needs is a vital step to a home buying process. Talk with your Bakersfield realtor today to help you find the best mortgage easier and faster and determine what mortgage options are best for you.