Credit Score and Home Buying: What You Actually Need

The Truth About Credit Scores and Mortgages

One of the most common things I hear from first-time buyers is: "I don't think my credit is good enough." More often than not, they're wrong. You don't need a 750+ score to buy a home.

Here's a general breakdown of where different loan programs stand:

What Lenders Actually Look At

Your credit score is important, but it's just one piece of the puzzle. Lenders also consider:

• •Payment history — Have you been paying your bills on time?
• •Debt-to-income ratio — How much of your income goes to debt payments?
• •Employment stability — How long have you been at your job?
• •Savings and assets — Do you have reserves after your down payment?

Quick Ways to Improve Your Score

If your score needs a boost, here are some strategies that can make a real difference:

• 1.Pay down credit card balances — Try to get below 30% of your credit limit on each card. Below 10% is even better.
• 2.Don't close old accounts — Length of credit history helps your score. Keep those old cards open, even if you don't use them.
• 3.Dispute errors — Check your credit report for mistakes. Errors are more common than you'd think, and fixing them can boost your score quickly.
• 4.Avoid new credit applications — Each application creates a hard inquiry. Hold off on new credit cards or loans until after you close on your home.
• 5.Set up autopay — Never miss a payment. Even one late payment can drop your score significantly.

Don't Let Your Score Stop You From Starting

The biggest mistake I see is people waiting years to "get their credit perfect" before even talking to a loan officer. The truth is, a quick conversation can tell you exactly where you stand and what steps to take — whether you're ready to buy now or need a few months to prepare.

I've helped plenty of buyers who thought they couldn't qualify, only to find out they were closer than they thought. Let's find out where you stand.