A Good Credit Score For Buying A Home

A Good Credit Score For Buying A Home

A Good Credit Score For Buying A Home by The Mary Ellen Vanaken Team of Keller Williams Realty www.mevhomes.com 678.929.6529

 A good credit score for buying a home can be determined by your payment history, salary history, current wage, available credit, scores other lenders are accepting and the current economy. Most lenders accept a minimum score of 650.

The credit bureaus have different evaluation systems for scoring. The factors used to calculate a credit score are a persons credit payment history, current debts, time length of credit history, credit type mix and frequency of applications for new credit. Since the scoring systems are based on different criteria which are weighted differently, the three major credit bureaus (Equifax, TransUnion, & Experian) may issue differing scores for an individual, even though the scores are based on the same credit report information.

Scores range between 350 (extremely high risk) and 850 (extremely low risk).  A score above 650 is typically considered good.

What A Score Gives You

Your credit score will help determine your mortgage loan interest rate. The better your score, the better your interest rate. FICO, (Fair Isaac Corporation), explains the differences in interest rate you may pay, depending on your score. If your score is between 620 and 639—considered a risky score by some creditors—you could pay an interest rate of 5.718 percent on a $300,000, 30-year conventional mortgage. In mid-August of  2010 FICO reported that if your score is at the high end, 760 to 850, your interest rate could be 4.129 percent on the same loan. A score of 650 may net you a rate of 5.172 percent.

Fixing Your Credit Score

Credit scores are updated monthly. If your credit score won’t allow you to get a home loan now, you can improve your score by doing a few things.  Pay all of your bills on time; late payments drive down your score. Pay down balances; maxed-out credit accounts can hurt your score. Check your credit report regularly for errors. This is one of the easiest ways to improve your credit score. If you find errors on your credit report and you can prove they are errors, the credit bureau has to remove them.

Remember, a good credit score for buying a home is only one part of the mortgage loan qualification process. Factors such as employment history, income and debt-to-income ratio will impact a lenders decision. It is up to a lender to decide whether to extend credit to a mortgage loan applicant.

For more information on tips for buying a home, contact The Mary Ellen Vanaken Team of Keller Williams Realty 678.929.6529. Mary Ellen's background is accounting and finance and will be able to help you find the best value your money can buy.

Buying a home is probably the largest investment you will ever make, whether you are buying your first home or are upgrading to a larger home.  If you are looking for an agent who is will work hard for you to sell your home or locate your new home, please contact Mary Ellen and her team today!



 A Good Credit Score For Buying A Home