When it comes to buying a house the first thing most mortgage lenders look at is your credit score. Why? Because it is one of the biggest factors in determining if you can even qualify for a loan.
Before we give you a break down of credit scores you first need to know that lenders are looking at your credit reports from the 3 credit bureaus: Equifax, Experian, and Trans Union. As a result you have 3 FICO credit scores (one for each bureau). Lenders rely on the middle score to determine your loan eligibility. For example, if you have a 575 a 590 and 585 of those three scores the score in the middle is 585.
Below is a breakdown of credit scores:
- 350-579 Not so great, and you cannot qualify for traditional mortgage financing
- 580 Okay-ish credit, but you qualify for mortgage financing (barely)
- 620 Better-ish credit, but you can still qualify for a mortgage (not the best terms)
- 640 Good-ish Credit. This is really where you want to be
- 660-680 Yay! You may be able to qualify for down payment assistance with these scores.
- 720+ Great credit and welcome to good financing terms.
- 750+ Awesome. Congrats! Anything higher and you are just bragging
Credit is not the only “qualifying” factor. Lenders also look at your Employment Status, Income, Debt, and what the ratio is between your Debt and Income, among a myriad of other factors. So if you are self employed you may have some hurdles to face, and if you have a lot of debt likewise. But there is always a solution to any of these hurdles, including have “not so great” credit