We have talked about credit scores many times in the past. Credit scores are important in today’s society – for more reasons than just your mortgage rate. It also plays a role in what you get approved for and how much money you need to put down. While it is true that the higher your credit score is, the easier it is for you to qualify. It does, however, not necessarily mean that if you have a low score, you will not get qualified. It may be a little more difficult and your mortgage rate might be higher in comparison.
We would recommend you find out what your credit score is in the months leading up to applying for a mortgage. This is helpful in case you need to work on improving your score – you will have time to do so before you apply.
A quick rundown of how credit scores are usually evaluated:
720 and above: excellent
690-719: good
630-689: fair
629 and below: poor
If you are looking to improve your credit score, we would recommend you make all payments on time. This includes your rent payment, credit card payments, and any other loan payments you might have.
Be sure to thoroughly go over your credit report! This is important. Mistakes can be made. If there is a mistake on your report, figure out how to fix it.
If you are in the poor or fair range, you might want to think about working with a credit counselor or loan officer. They will give you one on one support in order to improve your score.
Keep in mind that if you are unable to improve your credit score before applying for a mortgage, there is still hope for you. There are some specific loans that will work for you – do not lose hope.