Is My Credit Good Enough to Buy a Home?
Achieving a high credit score should always be something to aim for. When it comes to buying a home, the higher your score is, the easier it will be to attain a loan since it shows the likelihood of you paying back your debt to the mortgage lender. Potential homebuyers should strive for a credit score of at least 760 in order to attain the best rates. However, it is still possible to purchase a home with a slightly lower score, although you will likely face higher rates. If your credit falls on the lower end of the spectrum here are a few ways to improve your score.
- Review your credit report: once per year you are entitled to a free copy of your credit report. By obtaining your report you can check to see if there are any errors that have impacted your score.
- Pay down maxed credit cards first: This will help alleviate your credit utilization rate by paying down the cards who have or almost reached their credit limit
- Become an authorized user: Being added as an authorized user on a friend’s or family member’s credit card will help you to build credit with the help of someone else.
- Don’t apply for new credit lines: This can hurt your credit score significantly especially if you were recently denied opening a new account.
Depending on which type of home loan you are applying for, the minimum credit score can vary with some being as low as 500. When purchasing a home, find out how much you can get pre-qualified for based on your current credit score.