What Credit Score Do I Need to Buy a House in 2010?
© 2009, Brandon Cornett. All rights reserved.
Reader Question: Is there a certain credit score I need to get a mortgage loan for a house?
If you can afford to pay cash for a house, your credit score won’t matter at all. But I think what you’re really asking is what credit score you need to qualify for a mortgage loan. So let me address that question.
 |
Check Your Score First |
For mortgage approval, there is no single “cutoff” score that applies across the board. Every mortgage company has its own standards of lending criteria, what they are willing to approve, how they interpret risk, etc. On top of that, there are factors other than your credit score that determine whether or not you get approved for a loan. For example, the amount of debt you currently have will influence the approval process, and so will your current income level.
With that being said, we can make certain approximations about the process. In the current economy (with the tougher lending restrictions it brings) you would probably need a credit score of 650 or above to buy a house and get a mortgage. Of course, if you want to get the lowest interest rates the lender has to offer, you’ll need an even higher score — probably north of 750.
What credit score do I need to buy a house these days? This is one of the most common questions among first-time home buyers, and with good reason. Lenders will review many aspects of your financial background when considering you for a loan, but your credit score is high on the list. If you have already obtained your scores from all three reporting agencies, and you’ve found it to be low, you should focus your effort on improving that first. If you can improve your score before applying for a mortgage loan — even by 50 points or so — you’ll have a much easier time getting approved. You’ll also get a better rate on the loan.
Get Your Credit Scores - See Where You Stand
What credit level do you need to buy a house, given your other financial circumstances? There’s only one way to find out. You have start by getting your scores from Experian, TransUnion and Equifax. Compare your average number to the general standards I’ve outlined above, and you’ll know exactly where you stand. I hope that helps. Good luck.
P.S. - The video above was created at the end of 2009 and reflects current trends in the real estate and mortgage industries. So it’s an accurate assessment of the score you’ll need to buy a house in the current economy. Just remember that good credit is not the only thing needed to qualify for a mortgage. You’ll also need sufficient income relative to the loan amount, plus a manageable level of debt.