When purchasing your first home, it is important to find out your credit score. This is one of the first things lenders look at to determine if you will qualify for a home loan and what your interest rate will be.
In this article, you learn what a credit score is, how to find out about yours, and what it needs to be to get a home or mortgage loan.
A credit score is a three-digit number ranging from 300-850. The higher the number, the better your score.
It is calculated by looking at least five aspects of your spending and debt habits. Those five are:
There are three major credit bureaus, Equifax, Experian, and TransUnion. These companies keep track of your entire credit history.
Once a year, you are allowed to request a credit report from each of these companies. It is important to look over these reports carefully. Any mistakes they have made could lower your credit score.
While these companies provide your credit report for free, they do not provide your actual credit score. You can find your credit score by:
1. Asking your credit card company
2. Meeting with a non-profit counselor
3. Downloading a credit scoring app
There is no particular credit score for qualifying for a home or mortgage loan. Each lending agency has its own credit score qualifications. And how high your score needs to be also depends on what type of home loan you are applying for.
If you have a high score, you most likely want to go with a Conventional Loan. If your score is on the lower end, a Government Issued Loan might be best for you. Talk to your lending company to determine what type of loan is best for you.
Before approaching a lending company, it is best to have your credit score as high as possible. Here are just a few of the things you can do the raise your credit score:
Your credit report is not the only thing a lender looks at to determine if you qualify for a home loan. They also want to know your income, assets, debt, and the type of property you want to buy.
To learn more about what you need to qualify for a home or mortgage loan, read our article “How Do I Qualify for a Home Loan?”
Lenders look at your credit report and calculate your credit score so they have a good idea of how likely you are to make all your payments and to make them on time.
Having a high credit score makes you more likely to qualify for a home loan. Lenders are also more likely to give you a better interest rate, saving you thousands. It is worth the time and effort to find - and improve - your credit score before applying for a home or mortgage loan.
MortgageWorks offers financing for new home purchase, refinance, home equity, investment property, construction and a wide variety of loan program options to fit your every needs.
Servicing the state of California and the entire Coachella Valley, including Palm Springs, Cathedral City, Rancho Mirage, Indian Wells, Palm Desert, Desert Hot Springs, La Quinta, Indio and Coachella. Call Art today @ (760) 883-5700