Making the decision to buy a home is a significant life event, and if you’re like most people, you’ll have to take out a mortgage to make it happen. When you apply for a mortgage, one of the items most often looked at before signing off on your loan is your credit. So, it’s important to know what makes up your score and what it can do to your credit standing.
It’s hard to give the precise score you need to qualify for a mortgage because each lender has different scoring models and criteria for approving mortgages. According to the Los Angeles Times, you can technically qualify for a mortgage backed by the Federal Housing Administration with a score as low as 580, but other lenders will likely require higher scores.
Regardless of how good your score is, it’s not the only thing lenders look at. Lenders may also look at the size of your down payment and your employment history, how much money you make and debt you have. So, in addition to monitoring your credit report and credit score, having a stable job history, a sizeable down payment and minimal debt may also be considered during the home loan approval process.
Before you apply for a mortgage, consider reviewing your credit report and score to better understand what lenders may see. Knowing what’s behind your score can help with determining how much you can afford.
In addition, each time you apply for a mortgage, an inquiry may be placed on your credit report, which can impact your score slightly. However, if you do all your inquires in a short period of time your mortgage applications submitted during that time frame may count as a single inquiry when calculating your credit score, depending on the scoring model used.
About the Author
Mark Kennan is a freelance writer specializing in finance-related articles. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2014 ConsumerInfo.com, Inc. All rights reserved.