Know your credit score: Mortgage terms & approval basics

by Linda M. Lohnes 09/21/2022

If you're planning to buy a house, managing your credit score is vital. Mortgage lenders use credit scores as a benchmark for qualification, and a lower score can hurt your chances of being approved for a mortgage.

Here are some more details about how credit scores affect your mortgage loan chances:



What should my score be before I apply for a regular mortgage?

The customary loan application process requires a credit score of at least 620. It's possible to get a mortgage with a lower score, but you may have a higher interest rate as a result.



How is your credit score determined for a mortgage?

The loan officer obtains a single credit report containing all three credit report types. The lenders may use your credit score or lower middle credit score to decide if a joint partner applies.



How can a good credit score help with mortgage approval?

Mortgage lenders require higher credit scores because they use it as a way to measure how well you handle outstanding debt. The higher your credit score is, the less risk you pose to their lending. You could end up saving thousands over the life of your loan and capitalize on a lower monthly payment.



Is it possible to get a home with bad credit?

It's possible to get a mortgage with a low credit score, but there are trade-offs to be aware of. With conventional loans, a lower credit score might require a higher down payment or private mortgage insurance.

Other loan options like VA loans or loans offered by the Federal Housing Administration have more flexibility when it comes to minimum credit score. However, these mortgage loans come with other specific requirements for approval.

Maintaining a good payment history and credit report will help you in more ways than just getting a mortgage. However, for a major purchase like a home, it's crucial to have the best possible financial standing before beginning the process.

About the Author
Author

Linda M. Lohnes

It is my goal as your full service Realtor to provide you with SUPERIOR service at all time. I specialize in Hartford, Tolland and Middlesex Counties, specifically the towns of Manchester, Bolton, Glastonbury, South Windsor, Coventry, Vernon, East Hartford and Middletown and some select towns within a 30 mile radius of my office. My local expertise and extensive real estate experience, together with my legal and construction knowledge, will benefit you whether you are serious about buying or seller a home at this time, or are a returning client reviewing the many homeowner resources I offer. My personal objective when I work with a client is to achieve YOUR primary objectives. I believe your real estate experience should be fun and stress free.