Buying a home without a good score is almost impossible. A mortgage lender looks at your credit score and history to see if you are a possible risk. A lower score shows that you have a higher chance of defaulting on your loan. Find out what affects your score, how to improve it, and the score you need to become a homeowner.
What Affects Your Score?
Your credit score is one of the most significant factors affecting your interest rate and whether you will even qualify for a loan. The three major credit bureaus assign you a score based on any loans you had in the past. Credit cards, loans, and any bills you didn’t pay all play a role in your score. Every time you make a late payment or do not pay a bill, you lower your score.
Minimum Score Needed
In most cases, the minimum score you need to get a loan from a mortgage company in Coral Springs is 620. Some lenders only offer financing to people with a score of 660 or higher. If you plan on working with a company to secure a loan backed by the federal government, such as an FHA or VA loan, you usually need a score of 500. This helps you qualify for an FHA loan with a 10% down payment. A score of 580 is required for a loan with a 3.5% down payment. While the VA helps those looking for quality mortgage services, it often requires its borrowers to have a minimum score of 580.
How to Improve Your Score
Paying down your debts is one way to raise your current score. In addition, review your credit report to find any errors that might affect your score and report them immediately. You may find a judgment that you paid off years ago still on your report or a credit card that belongs to someone else. Try using a mortgage calculator to see the rates you qualify for as you improve your score.
Ace Mortgage Loan Corporation can help you find the right mortgage lender and get your approval quickly. Lenders often look at more than just your score, though. One major factor they look at is your ratio of debt to credit. If you have high balances on your credit cards and only pay the minimum amount due each month, they view you as a risk and are less likely to loan money to you. Working with a company that offers quality mortgage services is a smart way to improve your chances of getting a loan.
Getting mortgage approval is just one step in buying a new home. Your credit history and score have an impact on the offers you get. Contact Ace Mortgage Loan Corporation to see how a local mortgage company in Coral Springs can help you get the loan you need with your current score.