What credit score do I need to qualify for a mortgage?

There’s no doubt that your credit score can affect your chances of getting a mortgage. To put it simply, the higher the credit score is the better your chances will be. A good credit score usually results in better mortgage terms and quicker approval. Your credit history will show potential lenders how quickly you typically pay off your debts.

Lenders will look through your credit history and see how you’ve handled previous loans and debts. Since you know your credit score and history will be reviewed it’s certainly a good idea to review it yourself before applying for a mortgage. This will save you from any surprises and a possibly embarrassing situation.

Review your Credit Score

You can apply to a credit bureau to access your current credit score or rating. It may cost a nominal fee to do so, but it’s usually well worth it. You will receive the score quite quickly and it will be accompanied by a complete credit report. This will detail your payment history as well as your current outstanding debts. In addition, the report will explain the score level, compare it to other people, and give you some helpful advice on how to improve the credit score. You can also get free access to your report from the credit bureau, but this won’t include your credit score.

Make sure you review the report thoroughly and check to see that everything looks to be in order. Go over the information with a fine tooth comb because like everybody else, the credit bureau isn’t perfect and mistakes are sometimes made. If you discover any wrong numbers or information you should contact the bureau and enquire about it. However, be aware that it make take several weeks to rectify.

How to build credit

It’s quite hard to establish good credit if you don’t use credit cards and/or have never taken out any financial loans etc. However, you can still prove that you’re a good risk by making sure you pay all your other bills on time, such as rent, taxes, and utility bills etc. You may also consider taking out a credit card or short-term loan and pay them off in full on a regular basis. If your credit score is lower than expected due to an unusual financial situation, you should explain it in full to any potential lenders. There’s always a chance they’ll understand the circumstances and overlook it.

If your credit score is low and you expected it to be because you struggle to pay off debts on time, then you may want to seek out professional financial help. Financial planners will help you manage your funds and show you how to pay off debts in a timely manner by consolidating loans and properly managing your money. Some creditors may offer alternative payment options which won’t negatively affect your credit score.

Improving a Credit Score

You can help out your own cause when it comes to a credit score by making sure you don’t spend beyond your means. It may be easier said than done, but try not purchase anything that you can’t comfortably pay off. This may be hard to do if an emergency occurs, but in those instances, it’s a good idea to speak with a professional for advice. Your credit rating will improve if you pay your bills and debts on time without missing any payments, especially credit cards. It’s usually a good idea to purchase a house before spending large amounts of money on other necessities or luxuries since any added debt will affect your qualification for a mortgage. Remember that missed and defaulted payments may remain on your credit report for several years even if you have paid them off in the meantime.

Lower credit scores result in higher rates

A lower credit score will typically result in a higher mortgage rate and a higher score will equal a lower rate. This is simply because potential homeowners with lower credit ratings are seen as a higher risk by lenders. Of course, this isn’t always true, but the statistics support this in general. If your credit score is too low you may not be offered a mortgage by some lenders as they just don’t want to take the risk. Credit scores generally range between 300 and 900 with most lenders considering 60 and above to be good scores and 750 and above being excellent.

Have questions about getting a home mortgage?  Whether you have poor, fair or great credit, Mortgage Meister can get you a mortgage today with the best rate and terms available anywhere.  We work with customers with all types credit scores and can get you a mortgage even when most the banks and mortgage brokers cannot.  Contact us here to here to learn more.

Sorry, comments are closed for this post.

Just finalized my mortgage with @MortgMeister. Took exactly one day, now off to the cottage! #HighFive

Definitely not the same experience I had with the bank, thanks @MortgMeister #ThatWasEasy

Just got my quote from @MortgMeister, my wife gave me a high five when she saw it. Thanks Jeff!

Get Approved in as Little as a Few Hours Give Me a Quote

Malcare WordPress Security