Since people have realized the growing importance of having their own house, there are many who have been dreaming to purchase one, where the whole family can live and have peace of mind. However, purchasing a house in today’s economy is not an easy one, since it does involve a good amount of money. The person’s income alone might not be sufficient for buying a house. This is where, he has to seek financial assistance from banks and other financial lending institutions to buy his dream home. However, before trying to approach the lending institutions, he is to first understand what is a good credit score to buy a house and if his personal credit score is satisfactory enough or not to meet the lender’s eligibility requirements.
It is a credit scoring system that Fair Isaac Corp. has established. The scores are calculated for considering the credit users probability of making payments towards their bills. As a matter of fact, FICO scores is known to have become the benchmark for lending industry to determine credit granting decisions. There are also other agencies whose scores are used like Scorex. The three significant credit reporting bureaus in the U.S. is TransUnion, Experian and Equifax.
There are several things that are to be cleared up financially by majority of the mortgage applicants before achieving a fabulous credit score. The individual credit reports are to be evaluated periodically to ensure no errors are present in them. Accounts which shows late payments, adverse credit indications, judgments, collections, foreclosures, bankruptcies, etc. is likely to lower down the credit score. Paying off all old accounts, collections, judgment, etc. would be a wise decision made before mortgage application is made. Once done, within few days, the credit report would display against them ‘paid’ or ‘satisfied’.
The scores may range between 300 and 850. An individual having FICO score over 620 can apply for loans to buy a house. But the score of 620 does not mean that the best rate can be qualified upon. It simply means, the person qualifies for prime rate or standardized rate.
What is a good credit score to buy a house?
Majority of the mortgage applicants are not wary of the minimum score of 620 being the eligible line of credit. By getting to know the prime lending range can assist the person to aim for a specific credit score. When mortgage underwriting guidelines are concerned, lenders might differ. However, prime or typical ‘A’ credit borrower is one who enjoys having 650 and above FICO score, no late payments and mortgage payments.
Mortgage loan eligibility
The credit score is said to be just part of mortgage loan eligibility procedure. There are other aspects that are taken into account like debt-to-income ratio and income impact lending decisions, employment history, etc. But, the final decision to extend credit or not to the mortgage loan applicant rests upon the particular lender.
Therefore, doing some research can help the person to know more about the score required for buying a house and to ensure that a good personal credit score is maintained to get quick low interest loan approvals.