Securing an approved credit score is a vital step to apply for a mortgage loan or even any type of loan. This will entitle a homebuyer the chance to receive the amount he needs to pay for the home he wants to purchase. A passing credit score is a primary requirement for lenders and there is a bearing score that loan appliers need to meet.
What is the credit score that homebuyers must meet?
According to Budgeting, a credit score for mortgage appliers may range up to 300 to 850. This score is dependent on many factors which include "bankruptcy, late payments or referrals to collection agencies." It was also specified that a score of 620 is considered alarming and insufficient to meet a loan approval.
Meanwhile, Realtor reports that an approved credit score will still vary to what property or home you are applying it into. The lowest score which is required for an FHA-backed loan is 580 while the score needed for a "conventional loan" is 620.
If it happens that you currently have a credit score of 620, you may opt to pay a 20 percent down payment to meet the "approval" you need for the home, based on the article.
Senior Loan Officer Heather McRae of Chicago Financial Services advised that "680 is kind of like the unspoken minimum, but you can definitely get something done below that. If you're under a 680 credit score, the mortgage insurance premiums get pretty steep."
How can you achieve a good credit score?
While you learn now that a credit score is ultimately important in achieving your dream home, Bankrate suggests to limit using credit cards and lowering debts to help make you land a good credit score before applying for a loan. Apart from this, paying your dues on time is also crucial because this is the best indicator of how you handle money matters.
