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Credit Scores & Mortgage Lending

Credit Scores and Mortgage Lending

When it comes to buying a house the first thing most mortgage lenders look at is your credit score. Why? Because it is one of the biggest factors in determining if you can even qualify for a loan.

Before we give you a break down of credit scores you first need to know that lenders are looking at your credit reports from the 3 credit bureaus: Equifax, Experian, and Trans Union. As a result you have 3 FICO credit scores (one for each bureau). Lenders rely on the middle score to determine your loan eligibility. For example, if you have a 575 a 590 and 585 of those three scores the score in the middle is 585.

Below is a breakdown of credit scores:

  • 350-579 Not so great, and you cannot qualify for traditional mortgage financing
  • 580 Okay-ish credit, but you qualify for mortgage financing (barely)
  • 620 Better-ish credit, but you can still qualify for a mortgage (not the best terms)
  • 640 Good-ish Credit. This is really where you want to be
  • 660-680 Yay! You may be able to qualify for down payment assistance with these scores.
  • 720+ Great credit and welcome to good financing terms.
  • 750+ Awesome. Congrats! Anything higher and you are just bragging:)

Credit is not the only “qualifying” factor. Lenders also look at your Employment Status, Income, Debt, and what the ratio is between your Debt and Income, among a myriad of other factors. So if you are self employed you may have some hurdles to face, and if you have a lot of debt likewise. But there is always a solution to any of these hurdles, including have “not so great” credit

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