Credit Score 101
Posted on December 4, 2020
Your credit score impacts so much more than just your mortgage rate. It also affects the amount you will be approved for, how much you will need to put down and what you will pay for your private mortgage insurance. Individuals with higher credit scores are more likely to get lower (more desirable) rates because they are seen as more dependable and less likely to default on mortgage payments.
To qualify for a conventional loan (the most common loan type) with lower rates, you need a credit score of at least 620.
Here is a breakdown of credit score standings according to Credit Karma.
- Exceptional: 800 and above
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
Maybe your score isn’t where you need it to be and that’s okay! Here are some steps to build your credit up and to put you in a better position to apply for a mortgage:
- Pay your bills on time
- Pay off debt and keep balances low on other revolving credit
- Check for errors on your credit report and try to resolve them
- Work with a credit counselor or loan officer
If you are not able to improve your score in time to apply for a mortgage, there are other loan options out there that might be a better fit your situation. Talk with a loan officer to find out what the best loan option is for you.