• March 18, 2019

What kind of credit score do I need to buy a home?

Joe,Lewkowicz,3

What kind of credit score do I need to buy a home?

When buying a home, it is important to talk to a mortgage lender. They can help you figure out what kinds of loans you can get so you know which homes you can afford. For instance, if you have a credit score of 680 or above, you should have no problems getting a loan to buy a home. Having a credit score of low 600 or high 500 can still allow you to get some loans but it will be a lot harder. In order to get an FHA loan, you will want a credit score of 580 or higher. If you have a score of 500 or higher it is possible but unlikely that you will get one. USDA Loans require a credit score of around 640 or higher.

FHA loans have the lowest required credit requirements, with the minimum credit score being 500. When a homebuyer gets an FHA mortgage loan, they need to give a 10% down payment. Although it is possible to get a loan with such a low credit scored, it is very difficult. A credit score of 580 or higher is recommended and you will only need a 3.5% down payment.

How do I increase my credit score?

Credit utilization ratio is 30% of your credit score. Credit utilization ratio is the percentage of credit used on a credit card. The higher your balance is on your credit card, the lower your credit score will be. Therefore, the first step to improving your credit score is by making sure your credit card balance is as low as possible, especially before applying for a mortgage.

Pay off your balance

You want to make sure you are paying off your balance for your credit every month. If you have been sent to collections, you will want to take care of that as soon as possible. It is important to find out if the creditor will allow you to pay “For Delete” before paying off collections. Pay “For Delete” is when you, the collector, agrees to remove the account from your credit report if you pay off the balance. If they do not agree to it, don’t pay it, unless your lender tells you to. Paying off collections does not improve your credit score but getting collections off of your credit report can make a significant difference.

Be an authorized user

The more credit cards you have the better your credit score is, as long as you are taking care of the balances. Having multiple credit cards can get tricky so another option is to become an authorized user on a family member or friend’s credit card. By doing this you can have their credit history on that account added to yours. This can give you up to 30 extra points to your FICO score.

Stress is one of the largest concerns when selling a home. Staging, managing finances and documents, and simultaneously juggling the rest of your life can be completely draining. However, one thing is certain about selling your home: it’s a lot easier when you have a solid real estate agent to handle it. Remember, No-One Works Harder to Sell your Home more than Joe! Contact Joe today by calling 813-908-7293 or visit https://josephlewkowicz.com/

 

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