Buying a home is a goal that many people have for themselves. A lot goes into buying a house, but one of the most important things is a good credit score. The better your credit, the less risky you are as a borrower and the easier it will be to find a lender to work with.
Unfortunately, there are things that can reflect poorly on your credit score, causing it to drop and make it harder to secure a loan like a mortgage. But how high of a credit score do you need to actually buy a home?
Well, that is exactly what this guide is going to take a closer look at. Keep reading to learn more about the credit score you should aim to have before buying a house.
What Credit Score Do You Need to Get a Home?
The score you need to get a home can vary, but a score of 620 is generally seen as the minimum you will need to get a standard and conventional mortgage. Other types of mortgages might have lower score requirements, but that often depends on the lender and the exact type of loan.
For example, if you want a FHA loan you may only need a score of 500 or so. However, the higher your score, the better your mortgage will be in general. You will get a better interest rate and more favorable terms with a better score, in most cases. As a result, you should attempt to get your credit score as high as possible before trying to get a mortgage.
Great Ways to Improve Your Credit Score
Unfortunately, your credit score won’t improve itself if you continue to practice bad habits and don’t take steps to make a change. Before we get into the ways to improve your score, it is important to know the factors that influence your credit score.
This includes things like your payment history, how much you owe, length of credit history, and more. Without being aware of what goes into a credit score, you may be unaware that things you are doing are actually hurting it.
Now that you know what makes up your credit score, let’s go over a few things you can do to give your score a boost. First and foremost, you need to make an effort to make your payments in full and on time every month. This shows you are reliable and can handle having credit at your disposal, without overspending.
Next, you want to keep your credit utilization low. In most cases, you should keep your spending at or below 30% of your available credit. This shows you use the credit, but aren’t using it frivolously. If you are spending right up to your limit consistently every month, lenders may be weary about lending you money as they fear you may not be able to handle it.
Also, you want to make an effort to keep older credit accounts open. The longer your credit history, the less risky you are in the eyes of many lenders. So if you get a new credit card, it might not be the best idea to instantly close your old account.
This increase of your credit score from these tips won’t happen overnight, but with enough dedication and sacrifice, you can certainly turn it around and get an affordable and high-quality mortgage.
We hope this article has helped you learn about what credit score you need to get a home, and how you can improve yours quickly and easily.