Your credit score is something you’re either extremely proud of or absolutely worried about. It’s either something you rarely have to think about or something that’s always on your mind. It either helps you get the things you want most in life or is the thing that’s standing in your way.
Recent studies suggest that nearly 67% of Americans have ‘good credit’ (670 or higher) and nearly 22% of Americans have ‘exceptional credit’ (800 or higher). That means while a majority of people have good to exceptional credit, there are still millions of Americans that don’t.
For anyone interested in buying a home, you’ll come to learn that your credit score plays a major role in the process. Those with a good credit score will have very little trouble when buying a home, but those with bad credit score will struggle – though it’s not impossible!
The credit score needed to buy a home will differ depending on the type of mortgage loan you’re interested in and a variety of other factors. As a general rule of thumb, you should have at least a 580 for FHA loans, a 620 for a conventional loan, and a 640 for a VA loan or USDA loan.
Anything above a 700 will put you in a good position, no matter what type of loan you’re after – but it’s not the only thing mortgage lenders are looking for:
Your credit score affects the home-buying process in a number of ways. Since it’s an indicator of your financial responsibility, higher credit scores mean lower down payments and lower interest rates. Likewise, a lower credit score often mean higher interest rate and down payments.
If you’re interested in fixing your credit score or improving it before buying a house, then you’re going to want to understand what factors into your credit score. There are five major factors that play a role in determining your credit score, but some factors play a larger role than others:
A little bit of improvement in each category goes a long way in improving your overall credit score. When you consider the reward (putting yourself in a position to buy a house), it’s well-worth the effort – whether you’re paying off credit card debt, getting on time with payments, etc.
Almost seven million people buy a home in the United States every single year, but that number could be a lot higher when you consider the amount of people that don’t have the credit score to get a loan. It’s not that they don’t want to own a home – they just aren’t in a position to buy yet.
That’s okay, though. There are a number of things you can start doing today to put yourself in a better position to buy a home soon by improving your credit score and we’re going to share some of those things with you below. With a little time, energy, and effort, you can succeed.
Many people will go years and even decades without checking their credit reports. Although you might not see changes every month, keeping a close eye on your credit reports is a great way to catch mistakes or errors early on – ultimately allowing you to find a solution before it affects the score.
This one might seem obvious, but it’s important. If you have outstanding debts on your credit report, they aren’t doing your score any good. The sooner you pay those outstanding debts off (or at least sign up for a payment plan), the sooner you can start improving your credit score.
Speaking of payment plans, it’s important that you take them seriously. Make sure you’re paying the full amount due and always stay on-time with your payments. Doing so looks good on your credit report and will positively affect your score. Missed or late payments only make it worse.
Whether you need help making sense of your credit report, organizing your debt, consolidating your debt, or any other guidance when it comes to your credit – contact a professional credit repair company. They specialize in helping people like you fix their credit at a reasonable rate with any budget.
Like we mentioned above, the length of your credit history is extremely important. That’s why it’s smart to keep credit cards open instead of closing them. If possible, use the minimum amount every month and pay it off on-time to show a long-term, sustained, and consistent credit history.
Just because you have credit, doesn’t mean you need to use it. While it’s good to use your credit to build history, you don’t want to over-use it. Instead, do your best to keep your credit card balance low and pay off your debt on-time. This will reflect positively on your credit score.
At Sell Your House Fast Kansas City, we specialize in buying homes – it’s what we do for a living and we love every second of it. If you or someone you know is interested in selling a home in Kansas City, don’t hesitate to contact us. We’ll put together a cash offer for you in no time!
