- Payment history — About 35 percent of your FICO score is based on your debt payment history. Making payments on time and in full indicates that you will likely do the same with a mortgage loan, so a good payment history will boost your credit score. Late payments, liens, bankruptcies and lawsuits may result in a lower credit score.
- Amount Owed — About 30 percent of your score is based on your total amount of outstanding debt. Having lower account balances can help to lift your credit score, while higher balances can lower it.
- Length of Credit History — About 15 percent of your score is based on the length of your credit history. Generally, having open credit accounts for a longer period of time will improve your credit score.
- Types of Credit — About 10 percent of your credit score is based on the types of credit on your reports. It is important to have a mix of installment debt, such as student loans, auto loans or mortgage, and revolving debt like credit cards. This will demonstrate your ability to properly manage different types of credit.
- New Credit — About 10 percent of your score based on new lines of credit — opening or shopping around for multiple lines of credit and receiving multiple credit inquiries may have a negative impact on your FICO score.
WHAT CREDIT SCORE DO I NEED TO BUY A HOUSE?
While your FICO score is a key factor in obtaining a mortgage, there are other considerations involved, such as the type of loan you are applying for, your income, debt levels, as well as the lender’s underwriting guidelines. Generally, a conventional loan may require a minimum FICO score of 620, an FHA mortgage 580, while VA loans do not have an established minimum credit score. In addition, a higher credit score may also help to qualify you for a lower rate on your mortgage.
WHY SHOULD YOU CALL COMMUNITY MORTGAGE?
At Community Mortgage, we know that qualifying for a loan ultimately hinges on your income and creditworthiness. Our team also understands obtaining a loan can be difficult because lending requirements are strict and banks tend to reject borrowers who do not meet specific criteria. We will work diligently to arrange an affordable mortgage loan that best suits your financial situation.
We will tap into our network of lenders and work tirelessly to you secure mortgage loan at the best possible interest rate and favorable payment terms. This is why it is important to know your credit score before your begin shopping for a mortgage. With this information, you can take steps to maintain or improve your credit score and increase the likelihood of qualifying for a mortgage.
At the same time, you may still qualify for a mortgage if your credit score is generally lower, provided that you have higher income and lower levels of debt. Bear in mind that your credit score is only one of the factors in your mortgage, as there are other considerations involved in determining your creditworthiness. If you are looking to buy a home or refinance an existing mortgage, we can help. Call Community Mortgage today or complete the convenient online contact form.